URC 522: documents against payment or acceptance
The instruction is the whole mandate
URC 522 applies when the collection instruction incorporates the rules. Article 4 requires every set of documents to be accompanied by a collection instruction that gives complete and precise instructions. Banks act only on that instruction and on the rules. They do not read the invoice or the bill of lading in order to invent the missing term. If the instruction is incomplete, the bank tells the remitting bank. It does not guess that the importer is reliable enough for D/A.
Clean and documentary
Article 2 draws the line. A clean collection is financial documents that are not accompanied by commercial documents. A documentary collection is commercial documents, whether or not financial documents come with them. A sight draft alone is not the same work as a draft with invoices, packing lists, and bills of lading. The release rule in Article 7 is about commercial documents when a bill of exchange is payable at a future date.
Silence means against payment
Article 7 says the instruction should state whether commercial documents are released against acceptance (D/A) or against payment (D/P). If the instruction does not say, the documents are released only against payment. A presenting bank in Chattogram or Dhaka that releases the bills of lading against a mere acceptance, when the schedule was silent, has gone beyond the rule. The remitting bank’s later complaint is well founded. Acceptance of the draft and release of the documents are different steps.
Part payments and charges
Article 19 allows partial payments on a documentary collection only when the instruction specifically authorises them. Unless the instruction says otherwise, the documents are released only after full payment. Article 21 deals with charges. If the instruction does not forbid a waiver, and the drawee refuses the collecting bank’s charges, those charges may be waived and the documents released. The charges remain for the account of the party from whom the collection was received. Do not hold a full set of documents solely because a small charge was refused, unless the instruction says the charges may not be waived.
Not a letter of credit
A collection is not an issuing-bank undertaking. UCP 600 Article 14’s five banking days do not become the collection timetable. URC has its own presentation and advice rules, including advice of payment or non-payment without delay under Article 26. Bangladesh import reporting on an IMP form, where the payment is an import, is a foreign-exchange step under Bangladesh Bank’s circular. It does not convert the collection into a credit, and it does not authorise release against acceptance when Article 7 says payment.
Source
ICC, URC 522, Articles 2, 4, 7, 19 and 21. Summary only. See iccwbo.org. Open the cited source.
Frequently asked questions
What is a clean collection?
Article 2: financial documents not accompanied by commercial documents. A documentary collection is commercial documents, with or without financial documents.
If the instruction does not say D/A or D/P, when are documents released?
Article 7: if the instruction is silent, commercial documents are released only against payment. They are not released against acceptance.
May the bank release documents against a part payment?
Article 19: on a documentary collection, partial payments are accepted only if the instruction specifically authorises them. Unless it says otherwise, documents wait until full payment.