QUESTION
I need your help to comment on below:
We have received (LC) documents under schedule indicating that this presentation is subject to URC 522. Documents to be released against payment.
- I would like to know the reason for sending documents for collection under URC 422 instead of sending them in accordance with advised LC. UCP is more suitable for the beneficiary to secure payment, why would it agree to send the documents for collection?
- What’s the course of action that the issuing bank shall do toward the applicant and the beneficiary?
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ANSWER
Hi,
- It is agreed that the documents even when they are discrepant should be presented subject to UCP 600 as the issuing bank must honour once it has released the documents to the applicant.
The beneficiary should not present the discrepant documents for collection under URC 522, especially when it is a D/A collection. As you know, under a D/A collection the issuing bank is instructed to release the documents to the buyer against the buyer’s acceptance and it is not liable for payment if the applicant does not pay at maturity.
- If the documents are presented for collection under URC 522, the issuing bank should act in accordance with the remitting bank’s instruction and URC 522, i.e., release the documents against payment as in your case.
Kind regards,
Mr. Old Man
