第三章信用证.pptVIP

If it is “non-cumulative”, any sum not utilized in a period ceases to be available, that is, it is not carried over to a subsequence period. It must be remembered that under this kind of documentary credit and following this example, the obligations of the issuing bank would be for USD 90,000, i.e. six revolving periods each for USD15, 000, so while the face value of the documentary credit is given as USD15, 000 the total undertaking of the issuing bank is for the full value that might be drawn. (2) Revolving in value In the case of a documentary credit that revolves in relation to value, the amount is reinstated upon utilization within a given overall period of validity. The documentary credit may provide for automatic reinstatement immediately upon presentation of the specified documents, or it may provide for reinstatement only after receipt by the issuing bank of those documents or another stated condition. This kind of documentary credit involves the buyer and the banks in an incalculable liability. For that reason, it is not in common use. To maintain a degree of control, it would be necessary to specify the overall amount that may be drawn under the documentary credit. Such amount would have to be decided by the buyer and the seller to meet their requirements, and would have to agree to by the issuing bank. 6. Red clause documentary credit A red clause documentary credit is a documentary credit with a special condition incorporated into it that authorizes the confirming bank or other nominated bank to make advances to the beneficiary before presentation of the documents. The clause is incorporated at the specific request of the applicant, and the wording is dependent upon his requirements. The red documentary credit is so called because the clause was originally written in red ink to draw attention to the unique nature of this documentary credit. The clause specifies the amount of the advance authorized, which, in some instances, may be fo