Two Drawees On A Single Draft

[Ljo]

Hi All,

Received a collection bill where the exporter has created a bill of exchange showing drawee as the Importer AND the Presenting Bank.

Would like to know the following:
1. Why would the export customer want 2 drawees?
2. Is it ok to handle such a collection?
3. Who needs to accept this B/E?
4. What happens if the Drawee fails to pay?

Thanks in advance.

[picant]

Hi Pal,

IMHO, it is a way to link the bank for a future payment.
If the bank deliver the documents to the drawee, it undertakes to pay at maturity, not due to acceptance but only for having deliver documents.
Caution!
Ciao

[quang]

i think it is not acceptable, banks have no undertaking in collections, so, drawer should not draw on bank

[matinya]

I think it is just poor knowledge on avalization, the drawer an the drawer's bank wanted possibly to issue avalized draft only that they were not sure on how to do it. If at all they had to issue avalized draft then the draft should have been drawn to the drawee bank and not to the drawee directly. all the same there must be pre arrangments if avalization has to be done, since the consignee will also be the drawee's bank.

[dv01001]

Hi,
Just clarify clearly in this case, sorry for long. thanks
1. Why would the export customer want 2 drawees?
--> It may be the mistake or lacked knowlegde of the exporter relating to the collection. Sometimes, our bank also deal with similar case and then send cable to the remiting bank so that they can advise the principal to revise and represent correct draft
2. Is it ok to handle such a collection?
--> Obvious no, because the presenting bank has no obligation to honour a collection bill. They acts as a collecting agent in this regard
3. Who needs to accept this B/E?
--> The drawee who is the importer needs to accept this BE
4. What happens if the Drawee fails to pay?
--> * The principal (the exporter) will take the risks of non-payment, especially for DA. They can seek support from the presenting bank and the collecting bank to chase payment from the drawee. However, it's not their obligation.
The collecting bank can help the remitting bank/ the presenting bank to protect and chase related fee/ interest due to correspondent relationship
* for DP, goods are shipped back to seller, sold by auction or destroyed

[LLawrence]

There can't be to drawees as far as I know. It may be the case of Drawees customer e.g. goods going to them. The bill must be accepted by drawee. Maybe these two drawees are the same company? But again it doesn't make sense.