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Hi Mr Mike,
Q from Bpp revision kit,
Under UN Model law on Int’l Credit Transfer which of the following is an obligation of the sender :a ) To pay the receiving bank for the payment order when the receiving bank accepts it
b) To ensure funds are available for the sending bank to make the payment to the receiving bank
c) To agree with the beneficiary on the date that the credit transfer is to take placeThe answer is A
But logically I have chosen B
Can you explain that,
Thanks,
Article 5, subsection 6 states the words that are replicated in option 1 of the printed solution
Put into your search box ‘model law on international credit transfers’, then open the text option and check out Article 5
OK?
Hi Mr Mike,
I went through article 5 of the model law and I understood that it is according to the law ,
but when the credit transfer is initiated by the sender through the sending bank ,so here does the transaction depend on the receiving bank to accept it or just to proceed for the fulfillment of the transaction.
Thanks,
Hi again
Article 2 (definitions) tells us that the ‘receiving bank’ is the bank that receives the instructions from the sender to make money available to the beneficiary
The sender sends the instruction to the receiving bank
So the sender’s obligations are to make sure that there is money available to the receiving bank to cover that payment order and to pay the receiving bank when the receiving bank accepts the payment order
OK?
Hello Mr Mike ,
Thanks for clarification,
I checked again the model law and I understood that that the receiving bank is the one who receives the payment order by the sender,but then who will be the sending bank and where he fits into this process.
Thanks,
If I wish to make €2,000 available to Alawi Sayed, I will issue a payment order to a bank instructing the bank to make those funds available
That bank is called the ‘receiving bank’ because they have received the instruction from me, the sender
If / when the receiving bank accepts this instruction, it is then my responsibility to make sure that funds are remitted to that receiving bank
How I manage that is (almost) irrelevant!
The easiest way to consider it is to have the sender (me) with an account at the receiving bank so the receiving bank will simply debit my account upon the execution of the payment order
There is no definition that I could find in the Model Law for ‘sending bank’ but I surmise that if I don’t have an account with the receiving bank, I shall need to effect the remittance through my own bank and, in that situation, my own bank would presumably be classed as the ‘sending bank’
OK?
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