WHERE GOODS ARE CONSIGNED TO THE ORDER OF THE COLLECTING BANK

QUESTION

Dear Mr. Old Man,

We are the importer’s bank. We are encountering a situation related to a documentary collection transaction as follows:

We received from the remitting bank a set of D/P documents including original bills of lading consigned to the order of our bank. We notified the importer of the same. However, the importer refused to take up the documents to receive the goods.

Now the exporter requests the shipping company to transport the goods back, but the shipping company requires us (being the consignee on the bill of lading) to confirm that we refused to receive the goods.

Can you advise my bank on how to handle this situation?

Thank you.

KT

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​ANSWER

Hi,

My opinion on your situation is as follows:

Article 10 (a) URC 522 stipulates that goods should not be dispatched directly to the address of a bank or consigned to the order of a bank without prior agreement of on the part of that bank. Nevertheless, in the event that goods are dispatched directly to the address of a bank or consigned to the order of a bank for release to a drawee against payment or acceptance without prior agreement of on the part of that bank, such bank shall have no obligation to take delivery of the goods, which remain at the risk and responsibility of the party dispatching the goods.

Article 10 (b) stipulates that banks have no obligation to take any action in respect of the goods to which a documentary collection relates even when specific instructions are give to do so.

According to Articles 1 (b) and (c) URC 522, the bank is not obliged to handle any collection instructions and subsequent related instructions.

Based on the above articles, your bank can refuse to confirm that it refused to take delivery of the goods irrespective of whether the goods are consigned to the order of your bank.

What your bank should do now is to send advice of non-payment stating the reasons for non-payment to the remitting bank in accordance with Article 26 URC 522 and ask for the remitting’s instructions as to the further handling of the documents. If such instructions are not received within 60 days after its advice of non-payment, your bank may return the documents to the remitting bank without any further responsibility.

Best regards,

Mr. Old Man