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Unit Ten PAYMENT How to check L/C (1) The beneficiary (seller) should, on receipt of L/C, check the following terms stipulated in the L/C: 1. According to UCP500, a revocable L/C should have the word “revocable”. If there is only such a wording “Documentary Credit No. xxx” on the L/C, it should be taken as irrevocable. How to check L/C (2) 2. Check if the names of both the applicant (buyer) and beneficiary (seller) are correct, exactly the same as stated in the L/C. They shouldn’t be misplaced, e.g. the buyer as the beneficiary and the seller as the applicant. 3. Check whether the number of contract in the L/C is right. Generally there are two numbers in the L/C: one is the number of the L/C; the other is the number of the contract. How to check L/C (3) 4. Check if the L/C has come into force. Some Ls/C have such restrictive conditions stipulated in the L/C that the L/C will come into force only after the import licence is issued, or the seller’s sample has been received, etc. Therefore, before the L/C comes into force, the beneficiary shouldn’t take risks to ship the goods. How to check L/C (4) 5.The total amount in the L/C should be the same as in the contract. Attention should be paid both to the amount in figures and in words. Besides, the currency should be the same as provided in the contract. The total amount in the L/C should not be more than that in the contract or less than actual payment. How to check L/C (5) 6. Check if the payment is at sight or after sight. 7. Check if the validity, date of presentation and place of expiry of L/C is acceptable. If L/C reaches the seller just before the date of shipment , the seller should ask for extension of both the date of shipment and validity of the L/C. How to check L/C (6) If the place of expiry is in a foreign country and because the exporter can’t make sure that the documents will reach the paying bank within the validity of the L/C, the exporter should refuse to accept the term. How to check L/C (7)