Vanathawilluwa Vineyard Ltd v. Commercial Bank Of Ceylon – sllr 2008 volume 1 page 068

In the case between Vanathawilluwa Vineyard Ltd (VWV Ltd) and Commercial Bank of Ceylon Ltd, the court addressed whether export-based transactions using discounted bills of exchange under a ‘Documents against Payment’ (DIP) arrangement should be governed as a documentary collection pursuant to the Uniform Rules for Collections (URC) 1978, and the extent of the remitting bank’s duty of care. It was held that the transactions were subject to URC 1978, imposing a duty on the remitting bank to verify the bona fides of the nominated collecting bank. The findings established that the Commercial Bank had failed to exercise reasonable care by transmitting documents to “Giro Van De Bank” without adequate verification, and the debit of VWV Ltd’s account was unjustified due to the absence of formal d