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Letters of credit, credit, LC, L/C, commercial letter of credit, irrevocable letter of credit, confirmed letters of credit, revocable letters of credit, restricted negotiable letter of credit. freely negotiable letter of credit, confirmed irrevocable letter of credit, unconfirmed irrevocable letter of credit, revolving letter of credit, SWIFT, drafts, banks, nominated banks, bill of exchange, issuing banks,confirming banks. exporters, importers, exporting, importing, exportation, importation, export, import, service exporters. export trader, export trade portal, export trading, exporter association, export manufacturer, export marketing, exporter guides. export directory, manufacturing exporter, Taiwan exporters, Taiwan importers, Hong Kong exporter, Hong Kong importer, trade shows, trade fairs. China exporter, China importer, export manufacturing, export consulting, export trade leads, import trade leads, international business, trade exhibitions. letter of credit, insurance, trader, trading, exportacion, importacion, internet advertising, online advertisement, e-commerce, electronic commerce. logistics, transportation, transports, cargo insurance, ocean shipping company, courier, airlines, customs broker.
The documentary credit---letter of credit, documentary letter of credit, or commercial letter of
- pays the beneficiary (the exporter) or accepts and pays the draft (bill of exchange) drawn by the beneficiary, or
- authorizes the advising bank or the nominated bank to pay the beneficiary or to accept and pay the draft drawn by the beneficiary, or
- authorizes the advising bank or the nominated bank to negotiate,
against stipulated document(s), provided that the terms and conditions of the documentary credit are fully complied with.
For purpose of maintaining uniformity in the text, the words "letter of credit", "credit" and "
Please see the sample letter of credit.
Irrevocable versus Revocable Letters of Credit
A letter of credit (L/C) can be irrevocable or revocable. The L/C usually indicates whether it is an irrevocable or revocable letter of credit. In the absence of such indication, the L/C is deemed to be irrevocable.
- Irrevocable Letter of Credit
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There have been cases of an irrevocable L/C being amended without the consent of the beneficiary in the OEM arrangements. The beneficiaries affected were export-manufacturers from a developing country. The importers were able to convince and instruct the issuing bank to amend the latest date for shipment in the L/C, changing to a date earlier than the agreed upon date, at which time the beneficiary would not be able to ship the OEM products. The importers used sneaky tactics that aimed to cause the beneficiaries to default in the delivery. The intention of the importers was to cancel the orders from the existing OEM suppliers and buy from other suppliers in another developing country where the prices had become lower.
In the event of an amendment like the above-mentioned case, the beneficiary must give notification of rejection of amendment to the bank that advised the amendment at once.
Irrevocable and Without Recourse Letter of Credit
The irrevocable letter of credit received from an advising bank may be indicated as "irrevocable and without recourse documentary credit". The words "without recourse" mean that the advising bank will not be able to recover the money paid to the beneficiary in case the issuing bank does not pay the advising bank.
- Revocable Letter of Credit
Confirmed Irrevocable versus
Unconfirmed Irrevocable Letters of Credit
- Confirmed Irrevocable Letter of Credit
- Unconfirmed Irrevocable Letter of Credit
Restricted Negotiable versus
Freely Negotiable Letters of Credit
- Restricted Negotiable Letter of Credit
- Freely Negotiable Letter of Credit
Revolving Letter of Credit
When a letter of credit (L/C) is specifically designated "revolving letter of credit", the amount involved when utilized is reinstated, that is, the amount becomes available again without issuing another L/C and usually under the same terms and conditions.
The revolving L/C may be used in shipments of a wide range of goods to a buyer within a period of time (several months to one year usually).
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