Use Of Acceptances In Foreign Trade

Any member bank is permitted to accept drafts or bills of exchange which grow out of transactions involving the exportation or importation of goods.

Relating To Acceptances Based Upon The Exportation Or Importation Of Goods

Character Of Transaction On Which Acceptances Are Based - Identification Of Specific Goods Not Required

Good faith must be relied upon to a large extent in determining whether an acceptance is based on a transaction involving the importation or exportation of goods. A member bank would be justified in putting on a notification, as, "this acceptance is based upon a transaction involving the importation or exportation of goods," provided it is satisfied that the statement by its customer is made in good faith.

It is not necessary that the specific goods covered by an acceptance based upon an import or export transaction be identified at the time of the acceptance.

Member banks may best protect themselves in determining whether acceptances are based upon the exportation or importation of goods by stipulating the right at times to ask for substantiation of assurances from a customer.

Transactions Must Involve Import Or Export Of Goods, Otherwise Insufficient

A transaction in order that it may be the basis of a draft or bill eligible for acceptance by a member bank, must in itself involve the importation or exportation of goods. A transaction wholly independent of the transaction covering the importation or exportation of goods is not sufficient basis for an acceptance.

Drafts Treated As Drawn In Domestic Transactions

Where the contract between a seller of goods who draws a draft and the purchaser is entirely independent of the contract for the export of the goods, the draft would have to be treated as drawn in a domestic transaction and would have to be accompanied by shipping documents or secured by warehouse receipts or other similar documents conveying or securing title when accepted by the drawee bank.

Option To Secure Drafts As In Domestic Transactions

A dealer having drawn drafts accepted by a member bank in an export transaction, should be given the option, with the consent of the accepting bank, to secure such drafts in the manner required of those drawn in domestic transactions if he wishes to use the proceeds derived from the sale of the goods exported for purposes other than the payment of such acceptances.

Goods Ultimately Intended For Export Insufficient Basis

Where a domestic corporation "A" enters into a contract with another domestic corporation "B" to furnish materials to be used by "B" in the manufacture of products which "B" is under contract to export, the mere fact that the material furnished is ultimately intended for export in some form cannot be said to merge the two transactions into one. The transaction between "A" and "B" could not be said to involve the exportation of goods.