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WHERE THE DUE DATE IS A NON-BANKING DAY

By Mr Old Man
Posted on December 9, 2016
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South Hai Van Pass

QUESTION

Usance bill payment falls on 13th December i.e. Tuesday and it is a holiday for the country of making the payment, but not a holiday for the currency of payment (Ex: Currency of payment is USD and that day is not a New york holiday).

When we should pay?  Is it on 12th or 14th?

—————-

ANSWER

Hi,

UCP 600 defines banking day as a day on which a bank is regularly open at the place at which an act subject to UCP 600 is to be performed.

ISBP 745 B7 states payment is to be made in immediately available funds on the due date at the place where the draft or documents are payable, provided that such due date is a banking day in that place. When the due date is a non-banking day, payment is due on the first banking day following the due date. Delays in the remittance of funds, for example grace days, the time it takes to remit funds, etc., are not to be in addition to the stated or agreed due date as defined by the draft or documents.

In view of the above, the issuing bank will make payment on 14th.

Kind regards,

Mr. Old Man

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3 Comments

3 Comments

  1. Danushka

    December 12, 2016 at 10:54 pm

    Dear Mr. Old Man,

    Sry for continuously bothering you, but i need to clear my doubts as a doc checker.

    When establishing a LC (Ex : CIF) We ask for an insurance document in field 46 as stated below,

    “Insurance Policy or Certificate for 10pct above CIF value to payable the order of Bank of Ceylon covering Institute cargo Clause (A), Institute War Clauses (Cargo), Institute Strike Clauses (Cargo), Claims payable in Colombo irrespective of percentage.”

    Some of the insurance received by us,

    1. Assured to the Seller and in reverse endorsed for Bank of Ceylon by the Seller

    OR

    2. Assured to the Seller and in the body, they just copy the same text as we quoted in field 46A. i.e. “Insurance Policy or Certificate for 10pct above CIF value to payable the order of Bank of Ceylon covering Institute cargo Clause (A), Institute War Clauses (Cargo), Institute Strike Clauses (Cargo), Claims payable in Colombo irrespective of percentage” and it is not endorsed to the Bank of Ceylon.

    Question 1
    So 1 and 2 both are discrepant or can we accept both as complied with the LC.

    Question 2
    Is it necessary to state irrespective of percentage in the insurance document? or can we adhere to ISBP K40, if there is no excess/franchise clause stated on the Insurance?

    Your expertise in this regard is highly appreciated.

    Best Regards

    Danushka

    Reply

    • mroldman

      December 13, 2016 at 10:23 am

      Hi,

      In my opinion:

      1.a) The insurance document is acceptable based on ISBP 745 K20 (b), which say: “When a credit requires an insurance document to be issued “to order of (named entity)” the document need not indicate “to order” provided that the named entity is shown as the insured party or claims are payable to it, and assignment by endorsement is not expressly prohibited”.

      1.b) The insurance document is NOT acceptable based on ISBP 745 K20 (b), which say: “An insurance document is to be issued or endorsed so that the right to receive payment under it passes upon, or prior to, the release of the documents”. I don’t think such statement on the face meets the requirement.

      2. An insurance document need not state “irrespective of percentage”. But there is no discrepancy even when it states so unless it also contains a clause stating that the insurance cover is subject to a franchise or an excess (deductible).

      Kind regards,
      Mr. Old Man

      Reply

  2. Danushka

    December 14, 2016 at 12:36 am

    Thk u Mr. Old Man for Sharing your knowledge and thoughts with us. It certainly benefited for everybody in involve with Trade Finance activities.

    Reply

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