Explanation of URC 522 Article 6: Sight/Acceptance
Clause 1: “In the case of documents payable at sight the presenting bank must make presentation for payment without delay.”
Explanation: This clause addresses situations where the documents involved in a documentary collection are payable at sight, meaning the payment is due immediately upon the presentation of the documents. The responsibility of the presenting bank is to ensure that these documents are presented to the drawee (the party expected to make payment) as quickly as possible, without unnecessary delays.
Example: Imagine a situation where an exporter ships goods to an importer and sends the related documents (such as the bill of lading and invoice) through the banking channel under a sight draft. The presenting bank, upon receiving these documents, must promptly present them to the importer’s bank or directly to the importer for immediate payment. Any delay in this process could cause financial loss or disrupt the transaction.
Clause 2: “In the case of documents payable at a tenor other than sight the presenting bank must, where acceptance is called for, make presentation for acceptance without delay.”
Explanation: When the documents are not payable immediately (i.e., they are payable at a later date, known as a tenor), and the collection requires acceptance (such as an acceptance of a time draft), the presenting bank must present the documents for acceptance promptly. Acceptance here means the drawee agrees to pay the amount at a future date.
Example: Consider a scenario where an exporter ships goods and the payment terms are 60 days after sight (a time draft). The exporter’s bank sends the documents to the presenting bank. The presenting bank must present these documents to the importer or the importer’s bank for acceptance without delay. The importer, upon acceptance, commits to paying the amount after 60 days.
Clause 3: “Where payment is called for, make presentation for payment not later than the appropriate maturity date.”
Explanation: This clause pertains to situations where the documents are due for payment at a future date, known as the maturity date. The presenting bank must ensure that the documents are presented for payment on or before this maturity date, not afterward. This is crucial to ensure that the payment is made on time, according to the agreed-upon terms.
Example: For instance, if the payment terms are set at 90 days after shipment, the presenting bank must ensure that the documents are presented to the importer’s bank for payment on the 90th day. If the bank delays the presentation and presents the documents on the 95th day, the importer could refuse to pay due to the breach of the agreed terms, leading to potential financial losses for the exporter.