URC 522 – Art.10 - Risk ??? When Collecting bank endorse B/L

[THI THUY MYT_]

In the event that Collecting bank receive docs in which B/L, collecting bank is shown as consignee. Collecting bank ignore the fact that it is not with the spirit of URC-Art.10-a+b, then Collecting bank did endorsed the B/L, without further instruction from remitting bank. So is there any risk for collecting bank in that case? Because nature of collection is that banks have no commitment and responsibility.

Pls comment !!!

[NigelHolt]

If the drawee is the customer of the collecting bank, i.e. the collecting bank is also the presenting bank, the risk is that the drawee will take their banking business elsewhere. I cannot see any other risk, e.g. ‘legal’.

[AlbertB]

I believe article 10-e will give you some degree of protection if you don't insist on article 10-a (when you are also act as the presenting bank).

[THI THUY MYT_]

Hi JSMITH,

the risk is that the drawee will take their banking business elsewhere --> cloud you pls tell me more details.

In that case, there are 2 circumstance:

+ D/P: it's ok when getting payment from Drawee
+ D/A: when getting acceptance from Drawee, Collecting bank endorse the B/L and release docs to Drawee. But after that Drawee refuse to make payment on maturity date. So Collecting bank have any responsibility ??? (have to make payment!!!, because before that Collecting bank did endorse the B/L and released docs to Drawee).

To AlbertB:
article 10-e, it's ok when collecting bank get the authorization or instruction from remitting bank. But if not ?

[DanielD]

I think that the endorsement made by CB is only for transmitting the B/L and involves no responsability. (Under the B/L).
By the way, Jeremy, are the conclusions of the "Borealis" case
still valid?

Daniel

[GlennRansier_]

Per URC Article 10 a. endorsing a BL should only occur when the bank has received payment, or acceptance or completed the requirements requested in the collection request. A freely negotiable BL and general endorsement allows anyone holding an original BL to obtain the goods. If the BL is lost in the mail, there could be legal complications. Also, the consignee may be held responsible for shipping costs/fees due, and/or import duties and/or demurrage costs if the goods cannot be retrieved promptly. It was for all these reasons that URC stated in 10 a. that prior agreement should be received from the anticipated consignee before consigning a BL to a bank.

[NigelHolt]

TTM, in your example, the drawee can only take delivery of the goods if the collecting - presenting bank endorses the BL. If the collecting - presenting bank refuses then it makes sense for the drawee to transfer its business to a more cooperative bank. I think you will find presenting banks routinely endorse BLs and charge their drawee customers for the ‘privilege’.

Daniel, sorry, but I do not know of the Borealis case.

[AlbertB]

Dear Thi,

You have the authorization to release the documents including endorsement even if the collection instruction fails to indicate such authorization, you are authorized to do so when payment or acceptance is executed accordingly. Please read article 10-e (part) "the remitting bank shall be deemed to have AUTHORIZED the collectiing bank to do so".
Regards,
[edited 1/26/2009 5:26:34 PM]

[DanielD]

Jeremy,

Borealis AB v Stargas Ltd and Another. I quote:"the court held that liability under s3 of the Carriage of goods by sea act 1992 was limited to holders of bills of lading who took steps to enforce rights under the contract of carriage"
Regards
Daniel

[NigelHolt]

Thanks Daniel.