Question

Which of the following is true w.r.t goods sent under usance collection I.e. “Documents against Acceptance
1. The buyer will get possession of goods before payment by giving acceptance
2. The remitting bank can discount the bill if it has credit lines in favour of the seller
3. The presenting bank does not incur any liability in case the buyer defaults on due date after having acceptance
4. All the above

Answer 1

The buyer will get possession of goods before payment by giving acceptance

This is true w.r.t goods sent under usance collection I.e. “Documents against Acceptance

Option 1

Explanation:

• In the system for documents  against acceptance once the buyer gets the possession of goods and gives his acceptance in writing for the same then the bank is authorized  to release the payment.  It is an arrangement made between the buyer and seller through the banks.
• Normally many sellers use this method if there are strong business connections between the buyer and seller and they provide goods on basis of credits to the buyer who later releases their payments
• This form of system also certain insurance schemes for protecting the sellers from the defaulting buyers who do not make their payments for the goods. These schemes are under the 'supervision' of the 'government' of the country

To know more about Documents against Acceptance

Difference between document against payment and document against acceptance

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