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A document was sent on collection basis to Bank for acceptance of bill of exchange by Drawee (X).
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Collecting/Presenting Bank delivers the document to another buyer Y with the consent of Drawee X. Y effect payment.
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Upon maturity, Collecting/Presenting Bank refused to pay Remitting Bank stating that there are no sufficient balance in Account of Drawee X.
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Can collecting bank refused to pay although it has received payment from another buyer?

Hi Pal,

Documents are sent to collecting bank in two ways: Documents against payment and Documents against acceptance, the first system is simple the collecting bank deliver documents and send the proceeds to the drawer via a bank etc. The second system the collecting bank deliver documents against acceptance by the drawee of a bill of exchange at a certain maturity. The bill of exchange can hold by the collecting bank for payment at maturity or sent back to the drawer via other banks etc. A drawer could ask the collecting bank to avail this bill of exchange or to guarantee the payment at maturity, but this must be required to the collecting bank giving it correct instructions.
So if the drawee take up documents against simple acceptance, than goods, represented by those documents, are resold, the collecting bank has no liability for payment of the bill of exchange at maturity. The bank may protest the unpaid bill of exchange if instructed to do so.
Other comments appreciated
Ciao