ICC Rules Revision 1996

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Questions and Answers

What action must a presenting bank take for documents payable at sight?

Make a presentation for payment immediately. (correct)

Only present documents upon receiving acceptance.

Present for acceptance before payment.

Wait for the appropriate maturity date to present for payment.

What should a collection instruction specify if it includes a bill of exchange payable at a future date?

Whether documents are to be released against payment or acceptance. (correct)

The amount of payment required to release the documents.

Whether the drawee must authorize the payment before release.

The exact date when the bill of exchange will mature.

What is the consequence if a collection instruction does not specify the release condition for documents?

The collecting bank will assume liability for delays.

Documents will be released only against payment. (correct)

Documents will be released only against acceptance.

Documents will be held until further instructions are issued.

Which piece of information is NOT required in a collection instruction?

A history of previous transactions Signup and view all the answers

What must the collection instruction indicate regarding charges?

Whether charges may be waived or not Signup and view all the answers

For documents against payment (D/P), when will documents be released?

Only after the entire payment is received. Signup and view all the answers

What does URC 522 state regarding collections that include bills of exchange payable at a future date?

Collections containing them must specify release terms. Signup and view all the answers

Which statement is true about the terms for delivery of documents in a collection instruction?

They must be clearly and unambiguously stated. Signup and view all the answers

Which detail should NOT be provided for the drawee in a collection instruction?

Credit history Signup and view all the answers

What should be included regarding interest in a collection instruction if applicable?

The rate, period, and basis of calculation Signup and view all the answers

What is the risk if the address of the drawee is incomplete in the collection instruction?

The bank may attempt to ascertain the proper address without liability. Signup and view all the answers

Which of the following is NOT typically included in the details of the presenting bank?

SWIFT address Signup and view all the answers

Which information regarding payment is crucial in a collection instruction?

Method of payment and form of payment advice Signup and view all the answers

What is the status of the Uniform Rules for Collections, 1995 Revision?

They are binding on all parties unless expressly excluded. Signup and view all the answers

What does the term 'Collection' refer to in this context?

The handling of documents by banks to either obtain payment or deliver documents. Signup and view all the answers

In the event that a bank decides not to handle a collection, what is required?

The bank must inform the originating party without delay. Signup and view all the answers

What must be included in the collection instruction for URC 522 to apply?

The incorporation of URC 522 rules. Signup and view all the answers

What happens if the rules of URC 522 conflict with national law?

The provisions of the national law will prevail. Signup and view all the answers

Who is responsible for handling a collection if a bank declines?

The party who initiated the collection. Signup and view all the answers

Under URC 522, what actions can lead to the handling of documents?

Delivering documents against payment or acceptance. Signup and view all the answers

What is the primary purpose of URC 522?

To standardize procedures for document handling in collections. Signup and view all the answers

What is the primary purpose of the new ICC publication N°550?

To provide a comprehensive commentary and guidance on practical issues. Signup and view all the answers

What key aspect did the Working Party avoid drafting rules on?

The impact of electronic data interchange. Signup and view all the answers

How many comments did the Working Party evaluate during the revision process?

Close to 2,500 comments. Signup and view all the answers

Why did the Working Party not draft rules for local practices and requirements?

Because they might not be acceptable internationally. Signup and view all the answers

What was NOT one of the objectives of the Working Party during the revision?

To thoroughly redefine existing collection procedures. Signup and view all the answers

Which document did the revised rules replace?

Uniform Rules for Collections, ICC publication N°322. Signup and view all the answers

When did the revised rules come into effect?

January 1, 1996. Signup and view all the answers

What was a significant factor influencing the Working Party's evaluations during the revision?

Conflicting views presented by practitioners. Signup and view all the answers

How should documents be presented to the drawee?

In the form they were received Signup and view all the answers

Who is responsible for any necessary stamps affixed to the documents during collection?

The party from whom the collection is received Signup and view all the answers

In the absence of a nominated collecting bank, what will the remitting bank do?

Utilise any bank of its own choosing Signup and view all the answers

What should not be used in connection with presentation or reference to any period of time for actions to be taken by the drawee?

Expressions like 'immediate' Signup and view all the answers

What is the procedure called whereby the presenting bank makes the documents available to the drawee?

Presentation Signup and view all the answers

What must the collection instruction specify regarding actions to be taken by the drawee?

The exact period of time allowed Signup and view all the answers

If the remitting bank does not specify a presenting bank, what is the consequence?

The collecting bank can choose a presenting bank Signup and view all the answers

What happens if an incomplete or incorrect address is provided to the collecting bank?

The collecting bank is not liable for any ensuing delay Signup and view all the answers

Study Notes

URC 522 Overview

Revised rules effective from January 1, 1996, replacing the Uniform Rules for Collections (ICC publication N° 322) established in January 1979.
ICC Publication N° 550 provides comprehensive commentary reflecting discussions from the revision process, serving as guidance without replacing the rules.

Objectives of the Working Party

Review changes in international collection procedures, technology, and laws since 1979.
Address ongoing issues faced by practitioners in international collections.
Aim for harmonization in language and text based on UCP 500 standards.
Evaluated about 2,500 comments from over 30 countries during the revision.

Article 1 - Application of URC 522

URC 522 applies to all collections defined in Article 2 when incorporated into the "collection instruction."
Banks are not obligated to handle collections or instructions unless explicitly agreed otherwise.
If a bank refuses to handle a collection, it must notify the instructing party promptly.

Article 2 - Definition of Collection

"Collection" involves banks handling documents as per instructions to obtain payment or deliver documents under specified conditions.
Collection instruction must include detailed information about all parties involved, amounts, documents, terms, and payment methods.
Responsibility lies with the instructing party to clearly state terms for document delivery; failure to do so absolves banks of any consequences from ambiguities.

Article 5 - Presentation

Presentation involves making documents available to the drawee as instructed.
The instruction must specify exact timeframes for action, avoiding vague terms like “first” or “immediate.”
Documents should be presented in the received form, with banks allowed to make necessary endorsements at the sender’s expense.
If no presenting bank is nominated, the collecting bank has discretion in choosing a presenting bank.

Article 6 - Sight/Acceptance

For documents payable at sight, immediate presentation for payment is required.
For non-sight documents, acceptance and payment presentations must occur without delay, adhering to maturities.

Article 7 - Release of Commercial Documents

Collections shouldn’t have bills of exchange payable in the future unless specified.
If a bill is present, instructions must clarify if documents will be released against acceptance (D/A) or payment (D/P).
In absence of clear instructions, documents will only be released against payment, and banks are not liable for delays.

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Description

This quiz explores the revised rules of the ICC that replaced the Uniform Rules for Collections. Effective from January 1, 1996, these new regulations are accompanied by a comprehensive commentary that offers insights into the revision process. Test your knowledge on these critical updates and their implications.