公开课L C chapter 7概要1.ppt

Chapter 7  Letter of Credit Definition A letter of credit is a written undertaking issued by a bank (the issuing bank) given to the seller (the beneficiary) at the request and in accordance with the instructions of the buyer (the applicant) to effect payment at sight or at a determinable future time up to a stated sum of money and against stipulated documents which are complied with the terms conditions of the credit. Immediate Parties to a Documentary Letter of Credit 1. Applicant The applicant of a L/C is always the importer. When a sales contract stipulates that the settlement is under L/C, the importer will fill in and sign a L/C application form by which he is making a request to his bank to issue a letter of credit in favor of the exporter. 2. Beneficiary The beneficiary is always the exporter. He is so called because the credit is issued in his favor. He should check the terms and conditions in the credit against the sales contract. Immediate Parties to a Documentary Letter of Credit 3. The Issuing Bank The issuing bank is the one which issues a letter of credit at the request of an applicant to the beneficiary. 4. The Advising Bank The advising bank is the correspondent bank of the issuing bank or its head office/branch or subsidiary located in the exporter’s country. How is Letter of Credit issued? The procedure of issuing Letter of Credit is as follows: L/C * * OUTLINE Definition Immediate Parties to a Documentary Letter of Credit ( four parties) The procedure of issuing Letter of Credit Function of L/C Cases Beneficiary Advising Bank Issuing Bank Applicant 1. signing a contract 2. applying for L/C 3. sending L/C 4. advising the arrival of L/C 5. presenting documents for negotiation 6. sending documents 7. crediting the fund to the Advising Bank 8. asking for reimbursement ① ⑤ ③ ② ⑦ ⑧ ④ ⑥ The function of L/C is to convert trader’s credit to banker’s credit. Because the fund is paid by the banker himse