函电第8章.pptVIP

Establishment of L/C Amendment 8.1 Introduction Letter of credit is the most normal mode of payment in China. The letter of credit can assure the seller of payment if he makes the agreed-upon shipment. On the other hand, it also assures the buyer that he is not required to pay until the seller ships the goods. It is thus a catalyst that provides the buyer and the seller with mutual protection in dealing with each other. Seller/ beneficiary Buyer/ applicant Advising bank designated bank Issuing bank Shipping company 1)contract 2)application and cash deposits 3)opens a L/C 4)advise L/c 5)examine and prepare documents 6)payment 5) 7)Forwards documents and claiming reimbursement 8)examine documents and ask the buyer to redeem 9)pick up goods Procedures of L/C Procedures of L/C After a sales contract is initiated, the buyer and the seller agree to have payment settled by means of L/C. The applicant (importer) will first request the issuing bank to issue a L/C, usually an irrevocable documentary L/C, in favor of the beneficiary (exporter). The issuing bank will examine the credit-worthiness of the buyer before it considers issuing the L/C. The L/C issued by the bank is then passed to the advising bank (exporters bank) that represents the beneficiary in his country. Procedures of L/C On receiving the L/C, the beneficiary will check the terms and conditions against the sales contract to ensure that everything agrees with the credit requirement. Then he will forward all the documents required by credit to the advising bank or negotiating bank to get payment. The issuing bank will check the documents against the terms and conditions of the L/C. The exporter, after receiving the L/C from the importer, should first of all go through all the clauses set forth in the L/C to make sure they are in full conformity with the terms stipulated in the sales contract. Procedures of L/C When some discrepancies or some soft clause which the beneficiary does not agree to