4.Notice
Since negotiating banks have not made any irrevocable undertaking to honor under the letter of credit, an allegation of fraud of which they have notice operates differently on them than it would on an issuer or confirmer. A bank has not duly negotiated if it has notice of letter of credit fraud prior to negotiating. While a mere accusation of LC fraud subsequent to the issuance or confirmation of the credit will not defeat the right of an issuer or confirmer to reimbursement since they are obligated to pay, a negotiating bank that has no irrevocable letter of credit obligation can refuse to negotiate if notified before it does so and bears the risk if LC fraud is proven. On the other hand, notice of LC fraud after the negotiating bank duly negotiates does not affect its status.