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Documentary Bill

banker, documents, lading, customer, bills and attached

DOCUMENTARY BILL. A documentary bill is a bill of exchange which is accom panied by various documents, such as bill of lading, dock warrant, delivery order, policy of insurance, invoice.

A banker must see that policies of insur ance attached to bills received by him from abroad are stamped within ten days of their arrival in this country.

When a banker receives a bill for accept ance, with documents attached, and he sends the bill to the drawee to be accepted, and informs the drawee that the bill of lad ing and invoice are in his possession, the hanker is not thereby held responsible if the bill of lading should prove to be a forgery. And where a banker accepts a documentary bill at the request of a customer, and the bill of lading proves to be forged, the banker, having paid the bill, may recover the amount from the customer.

If documents are sent out along with the bill to the drawee in order that he may inspect them, they should not be left with him. A banker, however, may have re ceived instructions, from the correspondent sending him the bill, to deliver up the documents to the drawee upon his accept ance of the bill ; or he may have instruc tions to give up the documents on payment of the bill under rebate.

When a banker advances against ship ments he sends the bill abroad, with the bills of lading attached, for payment. When the documents are given up against acceptance, the banker has then to rely upon the acceptor, regarding whom he should have satisfactory information.

Where a credit is opened abroad at a customer's request, against bills of lading, policy, etc., the foreign banker draws on the banker in this country and sends the bill, with the documents attached, to the English banker. The documents may be taken by the customer and paid for at once ; or the amount may be charged to the customer and the documents held as security until required. In some cases, the bills of lading may be handed to the customer and a letter taken from him hypothecating the goods to the bank, and undertaking to hand over to the bank the proceeds from the sale of the goods, and until that is done the customer agrees to hold the goods or the proceeds in trust for the bank. When this is done a separate

account is usually opened for the operation. In such cases the banker really parts with his security and has to rely upon the honour of his customer. In case of failure, trustees generally recognise these undertakings. There is the danger, however, that there may be a contra account due from the cus tomer to a purchaser of the goods, in which case as the latter has no notice of the hypo thecation, he is entitled to deduct the contra account from the amount he is due to pay as the purchase price of the goods. (Sec TRUST RECEIPT.) When documentary bills are discounted, the banker takes a note of hypothecation or memorandum of deposit, from the cus tomer, by which the bill of lading and the goods are pledged to the banker and under which he is given a right, if necessary, to sell the goods. The stamp duty upon the note of hypothecation, or memorandum of deposit, is sixpence.

If a banker sells a documentary bill he indorses it and thus becomes liable thereon ; the bills of lading, indorsed in blank by the shipper, and the insurance policy, accompany the bill.

A banker keeps a record of all his lia bilities on acceptances and indorsements.

Where documents are given up against payment of a bill under rebate, the rate is usually 1 per cent. above the deposit rate of the principal London banks, and is calcu lated from the date when the money (free of cost) will be in the hands of the person entitled to receive it, and at the place where it is payable. A receipt is indorsed upon the bill that the amount has been paid under rebate at per cent. (See BILL OF EXCHANGE, BILL OF LADING, MARINE INSURANCE POLICY.)