国际结算chapter 7

7.2 Parties and Their Obligations
7.2.1 Applicant/buyer 7.2.2 Issuing bank/the buyer’s bank 7.2.3 Beneficiary/seller 7.2.4 Advising bank 7.2.5 Confirming bank 7.2.6 Negotiating bank 7.2.7 Paying bank 7.2.8 Accepting bank 7.2.9 Reimbursing bank
1)contract Seller/ beneficiary
5) 12)pick up S applicant
9)payment
4)advise L/c
6)examine and prepare documents Advising bank Negotiating bank 3)opens a L/C
Chapter 7 Letter of Credit
Learning objectives
1.Definition of L/C 2. Workflow of L/C 3. Contractual arrangement under L/C 4. The characteristics of a L/C 5. L/C Parties and Their Obligations 6. Kinds of L/C 7. Functions, advantages of a letter of credit
The confirming bank is the bank adding confirmation on the irrevocable L/C .
7.2 Parties and Their Obligations
Advising bank
The advising bank is the deputy of the issuing bank in exporter’s country.
7.2 Parties and Their Obligations
The
exporter may require amendment or reject the credit if he should not satisfy himself that the terms and conditions called for in the credit are in agreement with the sales contract. The exporter may take lien留置权 and stoppage in transit or resell goods if the importer goes bankrupt and is unable to pay.
2)Application 10)examine L/C documents and ask the buyer to redeem Issuing bank
11)payment
7)Forwards documents and claiming reimbursement
8)payment
7.1 Introduction of Letter of Credit
1)It is to make a payment to a third party (the beneficiary) or order, or is to accept and pay bills of exchange ; 2) It authorizes another bank to negotiate, against stipulated documents, provided that the terms and conditions of the credit are complied with.
The characteristics of a L/C
1、issuing bank takes on the first responsibility of payment. 2、Independent of the sales contract 3、dealing with documents only
7.2 Parties and Their Obligations
Beneficiary
1、The right to examine a credit upon receipt of it according to the sales contract; 2、Whether be paid or not solely depends on the fulfillment of terms and conditions of the credit.
The
beneficiary is also called the exporter or the seller. He is the one who has the right to demand the proceeds by presenting draft(s) and /or document(s) complying with the terms and conditions of the credit. A beneficiary also has some certain rights concerning the credit. He is responsible not only for accuracy and authenticity of the documents but also for the goods conforming to the contract. If the importer does not pay or has been in liquidation, the Beneficiary can claim from the opener for the
Issuing bank
1 、 According to the applicant ,sets up and modifies the letter of credit. 2、Issuing bank has no right to recourse after payment. 3 、 By issuing a credit the issuing bank undertakes full responsibility for payment
7.2 Parties and Their Obligations
Applicant In international trade, the applicant of L/C usually is the import.



The applicant is also referred to the buyer, consignee, importer, opener or principal. He fills out and signs a credit application and requests the bank to issue a credit in favor of an exporter abroad. Importer may reject to issue the credit if exporter does not submit a performance bond upon the stipulation on the sales contract, and exporter bears all losses then. Importer may also reject to accept the amendment of the credit required by the beneficiary if the requirement does not meet with the sales contract or something else.
7.2 Parties and Their Obligations
Applicant

Liable for payment to the issuing bank provided no discrepancy between documents and the credit;
Right to examine the documents and refuse payment; Any requirement of the applicant should be satisfied by certain documents and clearly indicated when making credit application
7.2 Parties and Their Obligations
Beneficiary
The beneficiary is drawer of bill of exchange . The beneficiary has a trade contract with the applicant and a letter of credit with the issuing bank .


7.2 Parties and Their Obligations
Issuing bank
The bank accepting the commission of applicant and setting up Letter of Credit is Issuing bank .
7.2 Parties and Their Obligations
7.1 Introduction of Letter of Credit
Contractual arrangement under L/C
1、 The sales contract between Applicant/buyer and Beneficiary/seller 2、The issuing application between Applicant/buyer and Issuing bank/the buyer’s bank 3、The Letter of Credit between Issuing bank/the buyer’s bank and Beneficiary/seller