WHETHER THE ISSUING BANK CAN RELEASE THE DOCUMENTS TO THE APPLICANT WITHOUT PAYMENT

2 Comments

1. 

   alamgirshams

   August 1, 2011 at 6:08 pm

   Dear Mr. Old Man,We have made the shipment; based on Irrevocable Sight L/C. We prepared the documents according to the L/C terms and submitted in our bank. Our correspondent bank couriered the documents to consignee’s bank on collection basis. Today is the 6th day, since the documents have already reached the consignee’s bank. The consignee has received “arrival advise of the documents” from his bank, today. Consignee also told us that the documents are ok.Now, is it possible that cosignee still doesn’t visit his bank to collect the documents and doesn’t make the payment in his bank?What would be of our payment?Looking forward to your expert guidance,Alamgir [email protected]

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2. 

   mroldmanvcb

   August 2, 2011 at 12:08 am

   Dear Alamgir Shams, I am not sure I understand your case exactly. I wonder why the documents made according to the L/C terms were sent to the consignee’s bank on collection basis. I guess that the documents presented were not complying; hence, your bank sent them to the issuing bank on approval. Please note that banks would employ the terms such as “documents sent on collection basis” and “documents sent on approval” when sending DISCREPANT documents to the issuing bank. The term “documents sent on collection basis” may lead to misunderstanding that this is a documentary collection under URC 522. Please check with your bank to determine whether the documents for payment under UCP 600 or for collection subject to URC 522. If the documents were sent to the issuing bank for payment under UCP 600, the issuing bank must honour if the documents presented constituted a complying presentation. If the documents were found to contain discrepancies and the issuing bank must give a single notice of refusal by telecommunication no later than the fifth banking day following the day of presentation. If the issuing bank fails to give notice of refusal within five banking days following the day of presentation, it shall be precluded from claiming that the documents do not constitute a complying presentation. The issuing bank must also act in accordance with Article 16 even when the documents are sent on approval under UCP 600. If the documents were sent for collection under URC 522, the transaction will be handled in accordance with URC 522 whereby the issuing bank acts as the collecting bank. and the buyer (drawee) would take up the documents when the goods have arrived at the destination. So, it may take longer time for the beneficiary to receive the payment. So, again, please check with your bank if the documents presented were complying with the L/C terms and conditions and if they were sent to the issuing bank for payment under UCP 600. If this is the case the issuing bank must honour. Please also note that the issuing bank has a maximum of five banking days from the day of receiving the documents to determine if they are complying and one or two banking days to arrange payment if the documents are complying. It’s just the 6th day not the sixth banking day, hence, be patient. If needed, please ask your bank to contact the issuing bank for the status of the documents. Hoping it is helpful. Best regards,Mr. Old Man

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