letter of credit 3

Chapter9LetterofCredit信用证ContentsofthisClass1.ReviewalltheinformationaboutL/CDefinitionofletterofcreditHowdoesaletterofcreditwork?Contentsofletterofcredit2.CharacteristicsofLetterofCredit3.Functions,andadvantagesofaLetterofCredit4.TypesofLetterofCredit1.1DefinitionofletterofcreditInsimpleterms,aletterofcreditisaconditionalbankundertakingofpayment.1.1DefinitionofletterofcreditAletterofcreditisawrittenundertakingbyabank(issuingbank)giventotheseller(beneficiary)attherequest,andontheinstruction,ofthebuyer(applicant)topayatsightoratadeterminablefuturedateuptoastatedsumofmoney,withinaprescribedtimelimitandagainststipulateddocumentswhichwerecompliedwiththetermsandconditionsofthecredit.(ICCPublicationNo.415)UCP600:Creditmeansanyarrangement,howevernamedordescribed,thatisirrevocableandtherebyconstitutesadefiniteundertakingoftheissuingbanktohonouracomplyingpresentation.1Documentarycreditapplication进口商填写开证申请书2Issuanceofthecredit开证行开出信用证3Advising/confirming通知行通知或保兑信用证4Amendmentofthecredit当事人修改信用证5Examinationofdocuments通知行审核单据6Accepting/Paying/Negotiating相关银行承兑、付款或议付信用证1.2HowDoesaletterofCreditWork?7Claimforreimbursement相关银行请求开证行偿付8Issuingbankexaminationofdocumentsanddecidetodishonororpayment开证行审核单据决定是否偿付9Accepting/Paying/Reimbursing开证行承兑、付款或偿付10Informtheapplicantofransomingthesedocuments通知进口商赎单1.3ThecontentsofletterofcreditInaccordancewiththeattachedStandardIrrevocableDocumentaryCreditForm,thecontentsofletterofcreditmaybedividedinto25items.Let`sunderstandtheusageforeachitem.1.Typeofthecredit.2.Creditnumber3.PlaceandDateofissue4.Dateandplaceofexpiry5.Applicant6.Beneficiary7.Advisingbank1.3Thecontentsofletterofcredit8.Amountofcredit9.Nominatedbankandcreditavailability10.Partialshipment11.Transshipment12.Insuranceclause13.Shipmentaddress1.3Thecontentsofletterofcredit14---20.Documentsneedtobepresented21.Thelatestdateforpresentationofthedocuments.22.Advisinginstruction23.Banktobankinstruction24.Numberofpages25.Signature1.3ThecontentsofletterofcreditIssuebyAirmailIssuebyTele-transmission5.2Characteristicsofletterofcredit1.Theissuingbankistheprimaryliability.2.Aletterofcreditstandsindependentofthesalescontract.3.Inletterofcreditbusiness,banksdealwithdocumentsandnotwithgoods,servicesorotherperformancestowhichthedocumentsmayrelate.4.Banksengagedinletterofcreditbusinessassumenoliabilityorresponsibilityfortheform,sufficiency,accuracy,genuineness,falsificationorlegaleffectofanydocumentspresented.5.Banksdoingletterofcreditbusinessassumenoresponsibilityfortheactsofthirdpartiestakingpartinonewayoranotherinthecredittransaction.Theindependenceorabstractionprinciple独立与分离原则Theseparationbetweendocumentsontheonehandandgoodsontheotherhand,sothatbanksdealwithdocumentsandnotwithgoods.Thatcreditisseparatetransactionfromthesalescontractandthereforebanksareinnowayconcernedwithorboundbysalescontract.Whenthetermsconditionsofthecredithavebeencompliedwith,theissuingbankorconfirmingbank(ifany)shouldfulfillitsindependentpaymentundertakingwithoutinterferencecomefromotherparties.Example1Acreditstipulatedthat50%ofcreditamountwillbepaidagainstthepresentationofdocumentswhichhavebeencompliedwithtermsandconditionsofthecreditandtheremaining50%ofcreditamountwillbepaidonarrivalofgoodsatdestinationwhichwerecorrespondedwiththedescriptionofgoodsinthecredit.theabovecreditisnotacceptable.Example2Acreditstipulatedthatquantityofgoods,gradeA60%,quantityofgoods,gradeB40%.BeneficiarypresentedinvoicesbeingevidencedgradeA40%,gradeB60%whichwereinaccordancewithsalescontractashesaidthatthecredithasstipulatederroneously.theaboveinvoiceisnotacceptable.5.3Functions,disadvantagesandadvantagesofaletterofcredit5.3.1Fromtheimporter'spointofview5.3.2Fromtheexporter'spointofview5.3.3Fromtheissuingbank'spointofview5.3.4Fromtheadvisingornegotiatingbank'spointofview5.3.1Fromtheimporter'spointofview(1)creditstipulatesshipmentdatetocontrolthetimeofdeliveryofgoods.(2)creditcallsforinspectioncertificatetocontrolthequalityofgoodsatthetimeofshipment.5.3Functions,disadvantagesandadvantagesofaletterofcredit5.3.1Fromtheimporter'spointofview(3)applicantmakesreimbursementagainstissuingbank`ssurrenderingdocumentsincludingB/Lwhichshouldbepresentedtothecarrierforthereleaseofgoodstotheapplicant.(4)applicantmayapplypartvalueofcreditformargintobegiveninadvancetoissueacreditinordertoreducetheoccupyanduseofflowingfunds.5.3Functions,disadvantagesandadvantagesofaletterofcredit5.3.2Fromtheexporter'spointofview(1)beneficiarymayobtainfinanceofpackingloansecuredbymortgageofletterofcreditreceivedbyhimbeforeshipmentwillbeeffected.5.3Functions,disadvantagesandadvantagesofaletterofcredit5.3.2Fromtheexporter'spointofview(2)onceconformingdocumentsarepresentedtothenominatednegotiatingbank,beneficiarywillbesuretosecurenegotiation(oroutwarddocumentarybillpurchased),andthereforespeeduphisfundsturnover.5.3Functions,andadvantagesofaletterofcredit5.3.2Fromtheexporter'spointofview(3)oncecredithasbeenreceivedbythebeneficiary,itmeansthatthegoodshavebeenapprovedf