LETTER OF CREDIT Definition: Letter of Credit can be defined as a binding document that a buyer can request from his bank in order to guarantee that the payment for goods will be transferred to the seller. Basically, a letter of credit gives the seller reassurance that he will receive the payment for the goods. In order for the payment to occur, the seller has to present the bank with the necessary shipping documents confirming the delivery of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability. Mechanism of Letter of Credit: Here we assume that the payment will be made by the advising bank. Here we go ahead to explain the steps: 1. Here there is a contract between the exporter and the customer in which the need for a Letter of Credit is specified. 2. Then the customer requests his bank to issue a Letter of Credit. 3. Customer’s bank then issues a Letter of Credit via the Advising Bank. 4. Advising Bank then passes on the terms of Letter of Credit to the exporter. 5. Exporter nearly always requests amendments to the Letter of Credit and copies requests to the Advising Bank. 6. Customer goes ahead and requests his bank to issue an amendment. 7. Then the amendment is issued. 8. Amendment is then advised to exporter. 9. Goods are then dispatched. 10. Documents required by the Letter of Credit are presented to the Advising Bank. 11. Payment is then made by the Advising Bank to the exporter. 12. Issuing Bank’s account with the Advising Bank will then be debited. 13. Documents are then passed to the Issuing Bank. 14. Documents are finally passed to the customer enabling him to use the Bill of Lading to obtain goods if sent by sea and payment made by customer to Issuing Bank. Uniform Customs and Practice and Documentary Credits (UCPDC): These are universally recognized set of guidelines governing Letter of Credits. The guidelines are published in the form of a Brochure by the International Chamber of Commerce. First publication was made in the year 1933. Revised versions were issued in 1951, 1962, 1974 and 1983. Latest publication is known as ICC 500 and adopted with effect from January 1, 1994. The International Chamber of Commerce with its headquarters in Paris frames the guidelines for UCPDC. UCPDC has now becomes indispensable, since Letters of Credit have become one of the safe methods of International trade settlements. The reason being that sellers hesitate to release their goods before receiving the payment, while buyers feel the need to have more control over their goods before parting away with the payment.
First, when a creditor (ICE) extends credit to a debtor (Top Quality) and takes a security interest in some property of the debtor, Top Qualities inventory in this case, it is called a secured transaction. The inventory is then considered collateral for the financing that ICE provided for Top Quality, which was made clear in the financing statement that ICE filed. Any secured transactions where personal property is used as collateral is governed by Article 9 of the Uniform Commercial Code. The UCC was revised in 2001 to better adhere to modern times, and since this case took place from 2007 to 2009, we will be applying the revised edition. There are many sections of Article 9 that should be considered when examining this case. First, the filing of a financing statement, form UCC-1 in Article 9, should be confirmed as filed with the appropriate state office. Once this has been done, confirming the attachment of Top Quality’s inventory to ICE, we can then look to confirm that the initial sale to Chrisman was paid in full to Top Quality, which it was. If this were not the case, ICE would be entitled to the remaining sale proceeds. Now we move on to the requirements of a buyer in the ordinary course of business, per Article 9 of the UCC. According the textbook, “A buyer in the ordinary course of business who purchases goods from a merchant takes the goods free of any perfected or unperfected security interest in the merchant’s inventory, even if the buyer knows of the existence of the security interest” (Cheeseman). The textbook then continues to explain that this rule is necessary because buyers would be reluctant to purchase goods if the merchant creditors could recover the goods if the merchant defaulted on the loans owed to secured creditors. These statements come from the Revised Article 9, section 320(a). This is based on the idea that the buyer purchases in good faith, meaning that they are
Cecelia will accept the this form of payment if it is done by September 10th.
In order to be charged under s. 163 of the criminal code, the materials sold,
A Louisiana attorney is constantly asked by non-Louisiana peers if the state ever adopted the Uniform Commercial Code or if they are still using the old, outdated, Napoleonic Code. Though Louisiana has stark interpretations of the relevance of the UCC, the state has adopted the code in piecemeal. This article is a partial synopsis of introducing readers to a few of the concepts of UCC as adopted by Louisiana compared to the existing principles of the law of sales.
6. Shipping Information – printed on shipping container and can be company name, handling instructions, product weight and quantity,
Client agrees to payment terms and conditions in Exhibit A, which is incorporated into this agreement.
...tivities and processes." Similarly, the submitters' code of conduct being prepared by the banks on the CDOR panel in consultation with IIROC and the Bank of Canada has yet to be published, but it is known that the code "will specify minimum standards for submission methodology, internal oversight and records retention" relating to CDOR submissions.
2) The Uniform Commercial Code: Contracts that are primarily for the sale of goods. This code is a standardized collection of guidelines that govern the law of commercial transactions.
Partnered with Legal in process and policy redesign for Canadian credit practices, adverse action, renewal transactions (D&B, FCRA), and UCC-9 filings and subordination.
The software already has this information stored. Then the user can print a check and send it or use electronic payment. The financing cycle is over. Financing activities involve such things as investments in and withdrawals from companies by owners, borrowing and repaying debts. Sage 50 allows users to record receipts separate from customer receipts, which can be credited to an equity account to represent investment or to a liability account to represent the borrowing of money.
soon have several ships in port, agrees to part with a pound of flesh if the
terms firstly, where it involves two other contracts respectively. Then, I will mainly analyse the duties of the shipper in the contract of carriage. Next, the most discussion will be referred to the contract of marine insurance on the relationship between the assured and insured, as well as the insurance cover. Finally, I will analyse letters of credit as a method of pay... ... middle of paper ... ...
...el such as: purpose of the loan, maturity of the security pledged, the history of the client with the company and the unique characteristics that the bank’s customers might have.
The following provisions with their terms and conditions shall become an integral part of the purchase order to the extent specified in the purchase order and shall become a supplement to the presently existing terms and conditions of the purchase order. All specifications and standards referenced in thi...
The instrument and the resolution or the argue by the other banks or other branches of MCB on our branch include cheque draft etc, are drawn by the other bank customers or other branches of MCB bank in clearing few things which are mention