The Benefits Of The Letter Of Credit

Submitted By user7222
Words: 508
Pages: 3
Open Document
The seller should carefully assess the credit-worthiness of the buyer, the buyer’s bank, and the risk in the buyer’s country. Normally, it is the seller’s bank which should assist the seller in the inquiry.
Financial strength of the bank issuing the letter of credit must be examined, and if necessary a credit may have to be confirmed (for instance if a smaller bank is involved in the transaction, depending on the country of origin, the credit may have to be confirmed by a large bank).
2. The seller should carefully review the letter of credit to make sure that all the details and conditions stipulated can be met (type of credit, schedules of shipment, expiry date, quality and quantity of goods6, packaging and documentation). Documentary credit is a separate transaction from the underlying sales contract. It is usually during the negotiation stage of the sales contract that the responsibilities of both the seller and buyer are defined and most of the terms and conditions of the documentary credit are agreed upon. Therefore, it is very important for the seller to be fully aware of all terms and conditions that need to be fulfilled before the application for a letter of credit is made. It is the seller’s responsibility to examine the letter of credit thoroughly to assure its workability (he may get the assistance of a forwarder).
6 Article 39 of UCP 500 allows, unless otherwise stipulated, for a variance in the quantity of plus or minus
5% against what is stipulated in the letter of credit. This variance is not authorized if the quantity of goods in the letter of credit is stipulated in specific number of packing units or individual items. But in any case the amount of drawing should not exceed the credit amount. If the letter of credit stipulated “about” or “approximately”, then a 10% variation in the amount, or quantity, or unit price is allowed.
3. All aspects of the letter of credit must conform with the terms agreed upon and should match the terms and conditions of the
Show More

Related Documents: The Benefits Of The Letter Of Credit

Business Law Final Study Guide

Business Law Final Study Guide Agency­type of working relationship in which one person represent another person in a business transaction with a third party. Agency by Estoppel­when the principal's actions lead the third party to believe that the agent is working for the principal. Bilateral Contract­a contract that contains two promises: one party promises to do something in exchange for the others promise to do something else. Capacity­the legal ability to enter into a contract.…

Words 853 - Pages 4

ACCT252 14S2c Essay

ACCT 252 S2 College of Business and Law COURSE OUTLINE Law of Business Contracts Semester 2 Department of Accounting & Information Systems Course Supervisor: Associate Professor Maree Chetwin Email: maree.chetwin@canterbury.ac.nz 14 ACCT252-14 S2 Course Outline PLEASE NOTE It is the student’s responsibility to retain all course outlines for any future assessment by professional bodies or other institutions 2 ACCT252-14 S2 1. Course Outline 3 COURSE OBJECTIVES If a person has agreed…

Words 2098 - Pages 9

354 Final Notes Essay

received when they receive a distribution of profits. This is a form of double taxation. Incorporation involves the expenditure of funds for organizational expenses. Documents necessary for the formation of a corporation, which are required by state law, must be prepared, and certain filling fees are needed. Joint Ventures – or joint adventure, are a relationship in which two or more persons combine their labor or property for a single business undertaking and share profits and losses equally or…

Words 2370 - Pages 10

Contracts: How They Effect Everyday Life Essay

Contracts: How They Effect Everyday Life BUS 311 – Business Law I Prof. Katheryne Rogers January 6, 2012 Most people in society think that contracts are pointless and unnecessary. Contractual law is not high on society’s list of things to study. What society does not realize is that contracts bind a majority of the decisions that they make on a systematic basis. In this paper I will make evident the effectiveness of contracts and how they are such an immense aspect in society’s everyday life…

Words 2005 - Pages 9

Tesco Business PLC Essay

The Sales of Goods Act 1979 This is an Act that manages the sale of goods that are bought and sold in UK, and the permanent contract between both groups. The contract of sale states that the transfer of goods from a seller to a buyer is completed through a money agreement - this is the price. Goods must determine a level of satisfactory quality for the price that the consumer/customer is willing to pay. And meeting the description and relevant details at time of the purchase. These details…

Words 916 - Pages 4

business unit 22 Essay

1 Prepare a short report and complete the tasks below. Identify the following from the contract/s that you selected: • The express terms – explain what these mean to the contracting parties • The implied terms – explain what these mean to contracting parties There are example contracts on moodle for you to use. 2 Considering the terms discussed in task one you must now consider what effect these terms have on each of the contracting parties in different situations, for example consider…

Words 355 - Pages 2

Uniform Commercial Code

UCP600 and USA Uniform Commercial Code have specific provisions about each controversial issue of transferable letter of credit. For instance, unless otherwise agreed at the time of transfer, all charges (such as commissions, fees, costs or expenses) incurred in respect of a transfer must be paid by the first beneficiary. UCP also gives explanation regarding the payment to the first beneficiary and the second beneficiary. Accordingly, the first beneficiary has the right to substitute its own invoice…

Words 1307 - Pages 6

Elements Of Contract

of a contract are having parties make an offer, there is a legal purpose and there is an acceptance then a consideration. In order to have a contract, there must be some people to make a contract with, whether it is person-to-person, business-to-business or person to business, there must be two collective parties to offer and a party to accept or deny the contract. A legal purpose simply means as the name suggests, that the contract’s purpose for being written or agreed on abides by the law of the…

Words 650 - Pages 3

Essay Lawbook

The Law Handbook Your Practical Guide to the Law in New South Wales 11th edition Contracts 12 Author Carolyn Penfold, UNSW, Sydney The information contained in this document is as up-to-date and as accurate as possible at time of publication in August 2009. 340 The Law Handbook A consumer is a person who acquires goods or services for personal or household use. We are all consumers. Most consumer dealings, whatever their size, cost or importance, are based on a contract. The basic…

Words 7113 - Pages 29

Essay about Plaw 210 Memorandum of Law

Memorandum of Law; Rough Draft QUESTION PRESENTED You asked me to answer the question, “Are the Virginia courts likely to follow the unconscionability doctrine as set out and applied in Jones v. Star Credit Corp.", based on the opinion and rulings of previous similar cases. SHORT ANSWER The Virginia courts are highly likely to follow the unconscionability doctrine that has been set out and applied in Jones v. Star Credit Corp. The Jones purchased a freezer unit from Star Credit Corp for $900…

Words 3101 - Pages 13