International Standard Banking Practice

Drafts and Calculations of Maturity Date

Paragraph B1 to B18


Basic requirement

B1) a. A draft, when required, is to be drawn on the bank stated in the credit.

b. Banks only examine a draft to the extent described in paragraphs B2)-B17).

Tenor

B2) a. The tenor stated on a draft is to be in accordance with the terms of the credit.

b. When a credit requires a draft to be drawn at a tenor other than sight or a certain period after sight, it must be possible to establish the maturity date from the data in the draft itself.

For example, when a credit calls for drafts at a tenor 60 days after the bill of lading date, and when the date of the bill of lading is 14 May 2013, the tenor is to be indicated on the draft in one of the following ways:

i. "60 days after bill of lading date 14 May 2013", or

ii. "60 days after 14 May 2013", or

iii. "60 days after bill of lading date" and elsewhere on the face of the draft state "bill of lading date 14 May 2013" or

iv. "60 days date" on a draft dated the same day as the date of the bill of lading, or

v. "13 July 2013", i.e., 60 days after the bill of lading date.

c. When the tenor refers to, for example, 60 days after the bill of lading date, the on board date is deemed to be the bill of lading date even when the on board date is prior to or later than the date of issuance of the bill of lading.

d. The words "from" and "after" when used to determine maturity dates of drafts signify that the calculation of the maturity date commences the day following the date of the document, shipment or the date of an event stipulated in the credit, for example, 10 days after or from 4 May is 14 May.

e. i. When a credit requires a bill of lading and drafts are to be drawn, for example, at 60 days after or from the bill of lading date and a bill of lading is presented evidencing unloading and reloading of the goods from one vessel to another, and showing more than one dated on board notation and indicating that each shipment was effected from a port within a permitted geographical area or range of ports, the earliest of these dates is to be used for the calculation of the maturity date. For example, a credit requires shipment from any European port, and the bill of lading evidences on board vessel "A" from Dublin on 14 May, with transhipment effected on board vessel "B" from Rotterdam on 16 May. The draft should reflect 60 days after the earliest on board date in a European port, i.e., 14 May.

ii. When a credit requires a bill of lading and drafts are to be drawn, for example, at 60 days after or from the bill of lading date, and a bill of lading is presented evidencing shipment of goods on the same vessel from more than one port within a permitted geographical area or range of ports, and shows more than one dated on board notation, the latest of these dates is to be used for the calculation of the maturity date. For example, a credit requires shipment from any European port, and the bill of lading evidences part of the goods loaded on board vessel "A" from Dublin on 14 May and the remainder on board the same vessel from Rotterdam on 16 May. The draft should reflect 60 days after the latest on board date, i.e., 16 May.

iii. When a credit requires a bill of lading and drafts are to be drawn, for example, at 60 days after or from the bill of lading date, and more than one set of bills of lading is presented under one draft, the on board date of the latest bill of lading will be used for the calculation of the maturity date.

B3) While the examples in paragraphs B2) (e) (i-iii) refer to bill of lading dates, the same principles apply to any basis for determining a maturity date.

Maturity date

B4) When a draft states a maturity date by using an actual date, that date is to reflect the terms of the credit.

B5) For drafts drawn, for example, "at 60 days sight", the maturity date is established as follows:

a. in the case of a complying presentation, the maturity date will be 60 days after the day of presentation to the bank on which the draft is drawn, i.e., the issuing bank, confirming bank or a nominated bank that agrees to act on its nomination ("drawee bank").

b. in the case of a non-complying presentation:

i. when such drawee bank has not provided a notice of refusal, the maturity date will be 60 days after the day of presentation to it;

ii. when the drawee bank is the issuing bank and it has provided a notice of refusal at the latest 60 days after the date the issuing bank accepts the waiver of the applicant;

iii. when the drawee bank is a bank other than the issuing bank and it has provided a notice of refusal, at the latest 60 days after the date of the acceptance advice of the issuing bank. When such drawee bank does not agree to act on the acceptance advice of the issuing bank, the undertaking to honour on the due date is that of the issuing bank.

c. The drawee bank is to advise or confirm the maturity date to the presenter.

B6) The method of calculation of tenor and maturity dates, as shown above, also applies to a credit available by deferred payment or, in some cases, negotiation, i.e., when there is no requirement for a draft to be presented by the beneficiary.

Banking days, grace days, delays in remittance

B7) 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.

Drawing and signing

B8) a. A draft is to be drawn and signed by the beneficiary and to indicate a date of issuance.

b. When the beneficiary or second beneficiary has changed its name, and the credit mentions the former name, a draft may be drawn in the name of the new entity provided that it indicates "formerly known as (name of the beneficiary or second beneficiary)" or words of similar effect.

B9) When a credit indicates the drawee of a draft by only stating the SWIFT address of a bank, the draft may show the drawee with the same details or the full name of the bank.

B10) When a credit is available by negotiation with a nominated bank or any bank, the draft is to be drawn on a bank other than the nominated bank.

B11) When a credit is available by acceptance with any bank, the draft is to be drawn on the bank that agrees to accept the draft and is thereby willing to act on its nomination.

B12) When a credit is available by acceptance with:

a. a nominated bank or any bank, and the draft is to be drawn on that nominated bank (which is not a confirming bank), and it decides not to act on its nomination, the beneficiary may choose to:

i. draw the draft on the confirming bank, if any, or request that the presentation be forwarded to the confirming bank in the form as presented;

ii. present the documents to another bank that agrees to accept a draft drawn on it and thereby act on its nomination (applicable only when the credit is available with any bank); or

iii. request that the presentation be forwarded to the issuing bank in the form as presented with or without a draft drawn on the issuing bank.

b. a confirming bank, and the draft is to be drawn on that confirming bank and the presentation is non-complying, and it decides not to reinstate its confirmation, the beneficiary may request that the presentation be forwarded to the issuing bank in the form as presented, with or without a draft drawn on the issuing bank.

Amounts

B13) A draft is to be drawn for the amount demanded under the presentation.

B14) The amount in words is to accurately reflect the amount in figures when both are shown, and indicate the currency as stated in the credit. When the amount in words and figures are in conflict, the amount in words is to be examined as the amount demanded.

Endorsement

B15) A draft is to be endorsed, if necessary.

Correction and alteration ("correction")

B16) Any correction of data on a draft is to appear to have been authenticated with the addition of the signature or initials of the beneficiary.

B17) When no correction of data is allowed in a draft, an issuing bank should have included a suitable stipulation in its credit.

Drafts drawn on the applicant

B18) a. A credit must not be issued available by a draft drawn on the applicant.

b. However, when a credit requires the presentation of a draft drawn on the applicant as one of the required documents, it is to be examined only to the extent expressly stated in the credit, otherwise according to UCP 600 sub-article 14 (f).