国贸case分析.pptVIP

Case study 林子皓 Case4.(P242) A Chinese bank issued standby Ls/C totaling millions of U. S. dollars，in favor of a U. S. company. These were irrevocable，transferable standby Ls/C valid for one year. When questioned by the supervising agency，the bank stated that these were merely evidence of absorbed foreign investment，”It has no obligation to repay principal and interest, and bears no responsibility，economic or legal，for the funds.” Was there any risk for the bank Yes, if the buyer couldn’t fulfill his obligation, then the bank should bear the risk. First, the standby L/C is a clean credit that guarantees the payment for a possible unfulfilled obligation on the part of the application, which is used for open account trading. When dishonored by the applicant ,the beneficiary can demand payment from the guarantor by presenting a draft and a signed statement by the beneficiary about the applicant’s failure to pay. Similarities and Differencesbetween Standby L/C and L/C similarities ①Letter of credit is a kind of bank credit ②Letter of credit is an independent and self-contained document differences Standby L/C : To get the payment , the beneficiary should present a draft and a signed statement about the applicant’s failure to pay. If the applicant can make the payment , the standby L/C will not take effect. L/C: To get the payment , the beneficiary should present stipulated documents in L/C. Issuing Bank’s Responsibility Under L/C When the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honor. Complying presentation means a presentation that is in accordance with the terms and conditions of the credit. An issuing bank is irrevocably bound to honor as of the time it issues the credit. In this case , Chinese Bank misunderstand the responsibility of standby L/C and he issued standby Ls/C in favor of a U. S. company. As the guarantor, the Chinese Bank have t