CDCS Question - Beneficiary Did Not Require Negotiation

Simple is Beautiful; the only thing came in my mind when thought of documentary collection. And I think more and more people are thinking the same in these days. Documentary Collection offers us far greater security than selling on open account; but not as much as a documentary credit. We should therefore be more cautious before starting selling using this method of payment. Documentary Collection Forum is an effort to help you on this way – admin; besttradesolution.com
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talluri231
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Joined: Mon Mar 26, 2012 1:02 am
First Name: Murali
Last Name: Talluri
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CDCS Question - Beneficiary Did Not Require Negotiation

Post by talluri231 » Mon Mar 26, 2012 2:39 am

The documents were found compliant but the beneficiary did not require negotiation of documents.....I am meaning this statement as.........................that the bills are lodged under collection basis.

My view - Answer is
d) The beneficiary must recreate and resend all original documents in order to be paid.

Reasons:
It is evident that some bank has negotiated the docs and sent the courier which is lost.
Thats the reason it is also said that the documents are compliant as per others view.

Otherwise that Negotiating bank, who has sent the docs would have not accepted the bills at their counters, lodged the bill in their banking system and sent the courier to the L/C issuing bank with its covering schedule.

Now, since that the docs are lost in transit, the bank who has negotiated the docs should ideally sent a SWIFT message that the bill is lodged and the docs are sent through the courier to the L/C issuing bank on collection basis.

Here only we will come to know that the docs had not reached the L/C issuing bank and concludes that its a case of Documents lost in transit.

Then finally it is the duty of the negotiating bank to convince the beneficiary who has submitted all the original documents, giving him the facts, to re-furnish all the set of docs in original for re-forwarding to the L/c issuing bank to collect the money.

Finally, in this case it will be a collective effort of all the parties in completing the said transaction as given below:

1. Beneficiary : To re-submit all the papers once again as he had given before for collecting the money from the applicant.
2. Negotiating Bank : Guide beneficiary in all aspects since the damage of re-exercise to the beneficiary is caused by the Negotiating Bank. For what ever the reasons docs not reaching the L/C issuing bank.
3. Applicant : Facilitate the beneficiary in all aspects for completing transaction. If require in getting the L/C Amended for extending the validity of the credit.
4. L/C Issuing Bank: Lastly the L/C Issuing bank to promptly reply the SWIFT messages that has come from the Negotiating bank and timely appraise the applicant to coordinate with his beneficiary for re-submitting the docs. And also conduct a preliminary check with the front office on the courier part if any investigations has to be done locally in his country.

Hence,
For this question in my view - Answer is...........d) The beneficiary must recreate and resend all original documents in order to be paid.


Thanks & Regards,
Murali Mohan Talluri

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