Bailee Receipt

Bailee Receipt

Summary of Bailee Receipt

A document used in import financing evidencing title to merchandise. The importer executes a Bailee receipt as a condition of receiving from his bank negotiable bills of lading, acknowledging the title holder of the goods to be the bank, for whom the merchant serves as agent. If the merchandise is sold by the importer on an open account basis, the invoices will bear the notation “Transferred and payable to the XXX Bank,”or similar wording, directing the purchaser to remit to the bank. In a cash-with-order transaction, the purchaser's check would normally be deposited with the bank holding the bailiee receipt. Upon settlement of the bank's interest, the balance of the proceeds would be turned over to the importer.

Some banks prefer to use bailee receipts rather than trust receipts when financing imports, because with bailee receipts, the bank retains actual title to the goods, whereas trust receipts convey security interest.

(Main Author: William J. Miller)


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