The Exporters Pocketbook Essay Research Paper Sam — страница 7

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contract in the letter of credit The Importer?s bank send the details of the L/C to the Exporter?s bank (the Correspondent Bank) The Correspondent Bank informs the Exporter that an L/C was opened in the Exporter?s favor and conveys to the Exporter the details of the L/C Exporter compares the conditions of the L/C to the conditions of the sales contract and especially whether the Importer?s Bank has irrevocably agreed to accept the Correspondent Bank?s signature regarding the receipt of the documents Exporter consults his bank and others whether the Importer?s bank is a prime, world bank of good standing Exporter makes sure the L/C is valid and corresponds to the timetables agreed with the Importer regarding both the delivery of the goods and payments. Another question: can the

documents be negotiated or transferred within the term of the L/C? Can the Exporter accept all the restrictions and limitations of the L/C? Are there any impossible conditions (for instance, in contravention of the foreign exchange regime) or wrong details (name of a port which does not exist, etc.) If the L/C is accepted by the Exporter, he starts production and manufacturing operations. When the goods are ready, Exporter contacts a carrier. After the goods are loaded, Exporter gets a bill of lading, a certificate of origin EUR1 or FORM A signed by the Customs, an export list and other documents Exporter presents documents to his bank which checks whether all required documents have been presented and whether they comply with the conditions of the L/C. The correspondent bank

then issues an ACCEPTANCE. The L/C then becomes a bank guarantee If the correspondent bank is also the confirming bank, it also pays the Exporter The correspondent bank transfers the documents and the acceptance to the opening bank The opening bank checks the documents. But if the correspondent bank is also the confirming bank ? even if the documents are wrong or faulty ? the opening bank must pay The opening bank transfers the payment to the correspondent and confirming bank The opening bank informs the Importer that the documents arrived. Importer deposits payment with the opening bank (or opens a credit line with it) Importer gets from the opening bank the documents endorsed Importer clears the goods and takes delivery of them through the carrier (he gets a delivery order from

the carrier, having settled all outstanding accounts with carrier)Settlement by Acceptance Seller transfers documents to correspondent bank with a note made out to the bank (the bank is the note?s beneficiary) Correspondent bank confirms acceptance of dated note to the seller Opening bank gets the document Opening bank credits correspondent bankSettlement by Negotiation Seller transfers documents to correspondent bank with a note made out to the buyer (the buyer is the beneficiary of the note) The correspondent bank pays seller against documents and note Correspondent bank transfers documents and note to opening bank Opening bank credits correspondent bankLetters of Credit – Form, Structure and Details Number and ID (this number must be placed on all subsequent documentation

pertaining to the same transaction Names and details of buyer, seller, opening bank (buyer?s bank), correspondent bank Description of goods ? usually the proforma invoice is attached and this sentence is then added: ?In accordance with proforma invoice number ? dated ? herewith attached to this letter of credit and which constitutes an integral and inseparable part thereof?. Total cost or price A list of documents (with the presentation of which by the seller payment to the seller will be effected): Commercial invoice, including a list of the goods, details of buyer and seller and signatures Packing list signed by seller Insurance policy including its type, the coverage it affords, amount covered. The policy?s beneficiary must be the opening (importer?s) bank and it must be fully

endorseable Detailed billways, receipts or bill of lading: who is entitled to receive delivery of the goods, who pays for the carriage, is carriage prepaid and where, etc. Other documentsDates ? when was the L/C opened, how long is it valid, date of loading and date of presentation of documents at the bank (maximum 21 days after loading of goods, if not otherwise specified) Special instructions: is transit or transshipment allowed (best to write ?transshipment allowed?), is part shipment allowed (best to write ?part shipment or partial shipment allowed?)If carriage or delivery not according to L/C ? L/C will NOT BE PAID!!! Types and Specifications of Documentary Credits Confirmed versus Unconfirmed Opening bank uses a bank in the Exporter?s country (usually the correspondent