Home Mr Old Man NOTING AND PROTESTING

NOTING AND PROTESTING

5 min read
1
0
2,872

QUESTION

How are you doing?

I currently face with an issue that I honestly need to seek for your assist in clarification.

We are a collecting bank of documentary collection against acceptance. On maturity date of the DA, the drawee is unable to pay the bill due to bankruptcy. Meanwhile, we have received message from remitting bank requested to protest. Quoted their message “please arrange to return the drafts marking the same ‘protested’” unquoted.

We need you helped to clarify our matter below.

1. What are the protest and its process?
2. The presenting bank message quoted “please arrange to return the drafts marking the same ‘protested’” unquoted, what does remitting bank want us to do? Is this related to note or not?
3. The drawee’s company was closed due to bankruptcy, what should we do with remitting bank request?

We appreciate your opinion on our queries and look forward to hearing from you.

Kindest regards

R
—————
ANSWER

Dear R.,

Re: Noting and protesting

Noting under UK Bill Of Exchange Act 1882 is the the procedure whereby a public notary presents BoE to the drawee on the same day it was refused or on the next business day. If the drawee refuses to honour the BoE, the public notary will “note” on the BoE the amount of his charges, the date and his initial. The BoE may be noted on the day of dishonour and must be noted not later than the next succeeding business day. The reason for refusal will be shown on a note attached to the BoE. The BoE can be then “protested”

Protesting is the procedure following the noting of the BoE and requires the public notary to issue a formal certificate certifying that the BoE has been dishonoured.

Please note that the legal procedures for noting and protesting a dishonoured BoE may not be the same in different countries. It depends on the local law. So, please refer to your legal consultant.

Regarding protest, please also refer to URC 522 Article 24, which says:

“The collection instruction should give specific instructions regarding protest (or other legal process in lieu thereof), in the event of non- payment or non-acceptance.
In the absence of such specific instructions, the banks concerned with the collection have no obligation to have the document(s) protested (or subjected to other legal process in lieu thereof) for non-payment or non-acceptance.

Any charges and/or expenses incurred by banks in connection with such protest, or other legal process, will be for the account of the party from whom the collection instruction was received”.

So, please check the covering schedule to be sure if the remitting bank gives any specific instructions regarding protest. If not, you have no obligation to have the documents protested for non-payment but just return the BoE accepted by the drawee to the remitting bank/principal.

Last but not least, under documentary collections you sometimes find the remitting bank’s colletion instructions “Protest for non-payment”. If you are unable or unwilling to comply with the instruction, i.e., undertaking the services of noting and protesting, please advise the remitting bank of the same.

Hope it is helpful.

Best regards,

Mr. Old Man

Load More Related Articles
Load More By Mr Old Man
Load More In Mr Old Man

One Comment

  1. mroldmanvcb

    June 25, 2011 at 5:06 pm

    From Ratha NhemHI MR. OLD MANTHAT IS HELPFUL INFORMATION. I REALLY APPRECIATE YOUR KNOWLEDGE. I HAVE ONE MORE QUESTIONS REGARDING TO THIS TOPIC.+ ARE THERE ANY LEGAL LAWS THAT STATE ABOUT THE HANDLING OF BILL OF EXCHANGE BY BANK? + IN PRACTICE OF DOCUMENTARY COLLECTION, THE PRESENTING BANK SHOULD KEEP BILL OF EXCHANGE OR RELEASE IT TO THE DRAWEE?+ THE BANK SHOULD ENDORSE BILL OF EXCHANGE TO THE DRAWEE OR NOT ?YOUR COMMENT IS HIGHLY APPRECIATE?REGARDS—————– From Mr. Old ManDear Ratha Nhem,In the case of a BoE at sight, the collecting bank surrenders the BoE to the drawee only when full payment has been received. Similarly, in the case of a BoE drawn and accepted payable at a future date, the collecting bank surrenders such a BoE to the drawee only when full payment has been received at or before maturity.When the payment is received, the collecting bank should discharge the BoE by indicating, either on the face or the reverse of the BoE, that full payment has been received, and should send the BoE to the drawee. Regards,Mr. Old Man

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

INVOICE NOT CERTIFYING WHAT HAS NOT BEEN SHIPPED

QUESTION Dear Sir, LC allows both AIR and SEA shipment. Amount: USD 100,000 Shipment by AI…