MT 754 and Documentary Collection

Finance · Post by **Finance** » Tue Jul 15, 2014 5:28 pm

We presented documents under a documentary collection (URC 522) to a foreign bank.

Cover letter instructed the foreign bank to release documents to the drawee against acceptance and to provide us notice of acceptance of the draft by the drawee via MT 999 to us.

Foreign bank did send back an MT 999:
"PLEASE TREAT THIS MESSAGE AS MT754.
YOUR DOCUMENTS FOR USD 159300.00 HAVE BEEN
ACCEPTED BY THE PARTY. PAYMENT WILL BE MADE ON
DUE DATE I.E. 07/05/2014."

Due date is now long past and payment has not been made.
Again, the draft itself was drawn on the buyer and not the bank. However, as the bank informed us to accept the MT 999 as an MT 754 - is it binding upon the bank that transmitted the message to pay?

Thank you in advance for your assistance.
Finance

picant · Post by **picant** » Tue Jul 15, 2014 10:16 pm

Hi Pal,

Collecting bank had to follow your instructions, written on the remittance letter.
The fact that it had used a Swift message stating to be treated as MT754, doesnot mean di per se that it had issued a l/c retrospectively.
The coll instructions were to deliver documents against acceptance(by the buyer) inform you about acceptance and holds the accepted draft for payment at maturity, without any engagements by the collecting bank.
The item was not paid at maturity, the collecting bank has informed you and wait for further instructions.
I dont see any issue.
Other comments appreciated
Ciao