Disertation international payment application for letter of credit issuance

Filling in the application for letter of credit issuance YÊU CẦU PHÁT HÀNH THƯ TÍN DỤNG Kính gửi :TECHCOMBANK Ngày 12 tháng 09 năm 2022 Với trách nhiệm về phía mình, chúng tôi đề nghị Te

Fundamental theory on documentary credit

Documentary credit definition

A documentary credit is a secure payment method that safeguards both sellers (exporters) and buyers (importers) in sales contracts For sellers, it provides a guarantee, typically issued by the buyer's bank upon request, ensuring payment is received after the goods are shipped Conversely, buyers are assured that the ordered goods will be delivered as promised.

Sellers typically request documentary credit to assess the buyer's creditworthiness In response, the buyer issues the necessary documents and also requests confirmation or compliance documents from the seller, which may include a bill of lading, insurance certificate, and certificate of origin, among others.

Upon fulfilling the contract terms, the buyer receives their goods while the seller is compensated In various regions, documentary credit is referred to as a letter of credit (L/C).

Parties to a documentary credit

Applicant of Letter of Credit.

The Applicant plays a crucial role in a Letter of Credit, as they are the party that initiates the process Typically, the buyer of goods acts as the Applicant, who opens the Letter of Credit based on their instructions To facilitate this, the Applicant coordinates with their bank to ensure the necessary payment is arranged The opening of the Letter of Credit is done in accordance with the terms outlined in the purchase order and the business contract between the buyer and seller Thus, the Applicant is a key participant in the Letter of Credit transaction.

Issuing Bank is one of the other main parties involved in an LC.

The issuing bank is responsible for opening a letter of credit, which is a financial instrument that guarantees payment to the supplier of goods, known as the beneficiary under the letter of credit, upon receipt of the required documents.

The beneficiary is a key party in a letter of credit, receiving the financial benefits outlined in the agreement This party is designated to receive the specified amount when the letter of credit is opened in their favor To access these funds, the beneficiary must submit all necessary documents to their bank, adhering to the terms and conditions set forth in the letter of credit.

The advising bank plays a crucial role in the letter of credit (LC) process by facilitating communication among all necessary parties and relevant authorities It is responsible for sending the required documents to the opening bank, ensuring a smooth transaction under the terms of the letter of credit.

The confirming bank plays a crucial role in a Letter of Credit by guaranteeing payment or acceptance of negotiation under the credit terms This party ensures that the financial obligations are met, providing additional security to the transaction.

The Negotiating Bank plays a crucial role in the Letter of Credit process, acting on behalf of the beneficiary This bank is responsible for negotiating the documents submitted by the beneficiary, ensuring they align with the terms and conditions specified in the Letter of Credit By verifying these documents, the Negotiating Bank helps prevent discrepancies and facilitates smooth transactions.

Reimbursing Bank is one of the parties involved in an LC Reimbursing bank is the party who is authorized to honor the reimbursement claim of negotiation/ payment/ acceptance.

The second beneficiary is an additional party involved in the Letter of Credit, acting on behalf of the original beneficiary in their absence This arrangement allows for the transfer of credits belonging to the original beneficiary, in accordance with the specified terms.

Documentary credit procedures

D iagram 1.1: The processes of opening a documentary credit

(1) The buyer applies to his bank (issuing bank) and opens a letter credit naming the seller as beneficiary based on specific terms and conditions that are listed in the credit

(2) Issuing bank acting on the request and issues a letter credit in favour of the seller and sends it to the advising bank named in the credit.

(3) The advising bank informs ( advises) the seller of the letter credit

Upon receiving the Letter of Credit (LC), the seller reviews it to ensure it aligns with the terms of the sales contract and confirms their ability to comply with the LC's conditions before shipping the goods to the buyer.

After the shipment is completed, the seller will submit the necessary documents specified in the letter of credit to their bank (advising bank) or to the bank that issued the letter of credit.

(6) The advising bank forwards the documents package to issuing bank for payment

(7) The issuing bank checks all documents to ensure that it complies with the credit terms and conditions and makes payment to the advising bank.

(8) The issuing bank presents documents to the buyer

(9) The buyer makes payment to the bank and releases the document to the buyer to enable him to receive the goods

Procedure to open a letter of credit at Techcombank

Diagram 1.2: Procedure to open a L/C at Techcombank

Step 1: Receive and check the application

- Receiving documents : Check the L/C open balance ( excluding the amount of money the customer has deposited at the branch) calculated in the customer’s credit limit

- The auditor checks the client’s legal records, the L/C open dossier includes the following documents :

Receive and check the application Sign the bill of lading, guarantee to receive goods

Close the importing application ( if compulsory )

Receive , check and process the documents

+ Import license (for conditional imports)

- Check the application: Check the content of the L/C opening request, the request letter for opening L/C must be fully signed by the account holder and the chief accountant

 Notice to the customer: if there is a difference between the content of the

L/C opening application and the relevant conditions in the contract sale.

The credit department reassesses the customer's payment capital capacity for import based on the L/C application and the IP department's opinion, verifying the permitted credit limit and recommending a margin of 100% or lower.

Step 2: Approve and consider opening L/C.

Based on the appraisal contents and suggestions of the IP and the Credit Department, the branch director signs the L/C open dossier and signs the attached documents (if any).

To effectively monitor L/C transactions, it is essential for the payer to register for L/C reference and maintain an organized archive The L/C open records tracker should include key details such as the L/C opening date, L/C number, customer name, L/C value, L/C type, margin rate, and any additional notes if necessary Additionally, it is important to select the appropriate Notification Bank and Negotiating/Contact Bank for seamless communication and processing.

- Enter data into the computer, open L/C:

+ Open an electronic letter of credit using SWIFT MODEL MT700,MT701

+ Transfer all documents alongside the electronic letter of credit to the monitor of the department , the branch leaders to sign the approval.

+ Handle an original L/C to the customer, with the seal and signature of the branch leader.

To create the profile cover for the Letter of Credit (L/C), ensure it follows the specified format and save one electronic copy that includes the signatures of the Auditor, the head of the department, and the branch director in the record.

Step 4 : Correct the L/C (if necessary)

The IP department receive the applicant requesting to correct the L/C , includes:

- Written agreement of beneficiary and L/C Opener (if any)

Step 5 : Receive , check and process documents , pay or accept payment

Review and verify documents against L/C records to ensure they align with the specified terms and conditions, including any amendments Subsequently, assess the compatibility of the documents with one another The payer then provides feedback on the voucher check sheet.

Upon reviewing the submitted documents, the branch will inform the customer if they are acceptable If the documents are deemed unsuitable, a telegram will be sent to reject the payment using the MT734/MT799 form This inspection and notification process must be completed within three working days of receiving the document set.

Authorized individuals to receive printed telegrams and deliver them to the payers In case telegraphic is not handled by the branch, immediately notify the management department.

In case the telegraphic notifies the documents are appropriate :

- The IP department checks and compares with the payment conditions and payment instructions specified in the L/C, amend the L/C.

- Check the source of L/C payment.

Notify the customer as per the specified form (Appendix 05) and communicate with the credit department regarding the foreign bank's request for funds to facilitate loan collection Ensure compliance with regulations for debt receipt, or reach out to the money transfer customer to ensure timely payment of the L/C.

In case the telegraphic notifies the documents are inappropriate :

The branch issues a notice (Appendix 05) to the customer, including a copy of the foreign bank's notification regarding unsuitable documents The customer is required to respond to the foreign bank within three working days from the date of receiving the notice.

- Based on the foreign bank's telegram and reference to the customer's reply, the branch shall notify the foreign bank of its acceptance or refusal to accept errors.

- In case the customer accepts the error: the customer will do the same as in the case of a request for money to notify the appropriate documents as above

If a customer declines to acknowledge the error, the bank prepares a formal refusal letter, seeks approval from management, and subsequently notifies the Bank.

Step 6 : Sign the bill of lading, guarantee to receive goods

Conditions for issuing the bill of lading endorsement, goods guarantee received by the customer directly to receive the goods according to the L/C before receiving documents through the bank:

The customer submits a written request for the issuance of a bill of lading, a goods guarantee, and a commitment to pay upon receiving documents at the bank, regardless of whether the documents meet the terms and conditions of the letter of credit (L/C).

To ensure a smooth goods receipt process, it is essential to present one copy of the sea waybill or air waybill, along with one copy of the invoice directly from the exporter Additionally, the shipping company's notice of receipt must be provided for the branch to issue a letter of guarantee for the receipt of the goods.

A mandatory deposit of 100% of the shipment's payment value is required to ensure the transaction, which can be fulfilled by either authorizing a bank branch to freeze the equivalent amount in a deposit account or establishing a procedure to obtain a loan if a credit contract is already in place.

To issue a guarantee for the receipt of goods or to endorse bills of lading, the payer must first fulfill the specified conditions Subsequently, they should prepare a letter of guarantee or an authorization letter for receiving the goods, which will be managed by the control department All relevant documents must then be submitted to the leader for signing the guarantee letter or endorsing the bill of lading.

Step 7: Close the importing L/C applications if one of the following cases occurs:

- L/C has been paid, the remaining balance is small and the seller does not continue to deliver the goods.

- Rejected payment and sent documents returned to the sending bank.

- Closing the application due to Techcombank's fault.

Step 8: Hand over the documents

The branch has approved the bill of lading or provided a guarantee for receiving the goods, ensuring timely payment in accordance with international practices related to the letter of credit (L/C) The payer then delivers the documents to the customer, requesting their signature and acknowledgment of receipt.

The document set is inadequate, and the customer has not yet approved the payment If the foreign bank's instructions are not received within five working days from the error notification date, the payer should make a second call and inform the customer about the voucher's return.

Sales Contract

Contract No.：HP/MAP01082022 Date 1st AUG 2022 ：

SELLER: GOLDEN BARLEY INTERNATIONAL PTE LTD

ADD 65Chulia Street, #42-05 OCBC Centre, Singapore 049513：

BUYER : MINH CHAU CO.,LTD

ADD: 121 Nguyen Hue Street, Pho Moi Ward, Lao Cai City, Lao Cai Province, Vietnam

Deputy General director: Nguyen Minh Khoi

This contract is established between the Buyer and the Seller, in which the Buyer agrees to purchase and the Seller agrees to sell the specified commodity under the outlined terms and conditions.

The Seller agrees to sell and deliver 200.00 MT of Mono-Ammonium Phosphate (MAP) in bags, allowing for a variation of 10% more or less in both quantity and total amount at the Seller's discretion, while the Buyer commits to purchasing and accepting the delivery.

Color : White or off-white powder

The price for MAP fertilizer is USD 370.00/MT CIF HAIPHONG ACCORDING TO INCOTERMS 2010

3.TOTAL VALUE : USD 74,000.00（Total say U.S DOLLAR SEVENTY-FOUR THOUSAND ONLY）

Time of delivery: The commodity shall be delivered in multiple shipments before or within 60 days after the L/C issued.

- The Seller Company has responsibility for loading, shipping and local transportation.

- Latest date of shipment: Oct 4th, 2022

- Loading port: Singapore Port, Singapore

- Destination port: Haiphong Port, Vietnam。

- Partial shipment is not allowed.

-The number of packages contained in a single container : 500 packages ( full container loading – 20’ FCL) , as a result, each container stores 25.00 MT regardless of the pallet

-Net Weight of each bag : 50 kg per bag

1) Full set (3/3) of original bill of lading marked “freight prepaid”

2) Commercial invoice in triplicate: 2 originals

3) Packing List in 3 original and 3copies.

4) Certificate of Quality and Quantity/Weight/container cleanliness in one original & 3 copies issued by an independent surveyor

5) Certificate of origin issued by ccpit: 01 original and 01 copy

6) Insurance policy covered by the seller all risk for 110% invoice value payable in Viet Nam: 02 originals

By irrevocable L/C 100% at sight for full contract value in US Dollar.

Buyer shall open an irrevocable Letter of Credit at sight L/C in favor of issuing bank Time of opening L/C: Aug 11th, 2022

Bank’s name:TECHCOMBANK LAO CAI

Bank’s address: 010 Hoang Lien Str., Coc Leu Ward, Lao Cai City, Lao Cai Province, Vietnam

Bank’s address: 65 Chulia Street,# 09-00 OCBC Center,Singapore 049513 Swift: OCBCSGSG XXX

At the loading port, an independent surveyor will issue certificates of quality and quantity, which will serve as the final basis for payment prior to shipment The seller will be responsible for the inspection charges.

In the event that the shipment of goods is hindered or delayed, either partially or entirely, due to force majeure events such as war, earthquakes, floods, storms, heavy snowfall, or other similar causes, the seller will not be held liable for any non-shipment, late shipment, or failure to fulfill the contract.

All disputes arising from this contract will be resolved through negotiation between the parties involved If an agreement cannot be reached, the matter will be referred to the International Economic Trade Arbitration Commission of Vietnam, with Vietnamese law governing the proceedings The arbitration results will be final and binding for both parties.

This contract will take effect on the date of signing, and any amendments or additional clauses will only be valid if they are documented in writing and confirmed by both parties.

11.2 Definition as per Incoterms 2010 and UCP600 latest version.

This contract incorporates the General Terms and Conditions outlined herein, which are essential to its validity A signed contract sent via fax is considered legally binding.

For and on behalf of

GOLDEN BARLEY INTERNATIONAL PTE LTD

For and on behalf of Buyer

Filling in the application for letter of credit issuance

YÊU CẦU PHÁT HÀNH THƯ TÍN DỤNG

Kính gửi :TECHCOMBANK Ngày 12 tháng 09 năm 2022

Với trách nhiệm về phía mình, chúng tôi đề nghị Techcombank phát hành thư tín dụng không hủy ngang theo nội dung sau:

Back to back Revolving Irrevocable

ADD: 121 NGUYEN HUE STREET, PHO MOI WARD, LAO

CAI CITY, LAO CAI PROVINCE, VIET NAM

GOLDEN BARLEY INTERNATIONAL PTE LTD ADD: 65 CHULIA STREET, #42-05 OCBC CENTRE, SINGAPORE 049513

Drafts not required drafts required

SINGAPORE PORT,SINGAPORE ANY PORT(S) IN HAIPHONG, VIETNAM 221004

40A: From of Documentary Credit Transferable

31D: Date and Place of Expiry

50: Applicant (full name and address): 59: Beneficiary (full name and address):

By Negotiation Acceptance Payment Payment

Sight days after for 100 % of Inv Value

43P: Partial shipments Allowed Not Allowed See field 47A

44A: Loading on Board/Dispatch … at/from

200.00 MT Mono-Ammonium Phosphate (MAP)

CIF CIP FCA CFR EWX DAF Incoterms 2010

ORIGINAL BILL OF LADING ,notify the applicant and show country of loading port.

Clean Showing flight number and flight date

Original Cargo Receipt signed and stamped by the Beneficiary, the Applicant and Techcombank…… , each amendment if any must be signed and red stamped by Techcombank …… , showing shipment date

CCPIT in 01 originals and 01 copy C/O must not be hand-written except for signature.

Insurance Policy/Certificate in assignable form and endorsed in blank for 110

VIETNAM , invoice currency and showing total originals issued.

1.ONE ADDITIONAL COPY/PHOTOCOPY OF ALL ORIGINAL SHIPPING DOCUMENTS TO BE PRESENTED FOR LC ISSUING BANK’S FILE. OTHERWISE USD10.00 WILL BE DEDUCTED FROM THE PROCEEDS

A discrepancy fee of USD 100.00 will be deducted from the proceeds for all documents negotiated with discrepancies under this credit This charge will be the responsibility of the beneficiary, regardless of any contrary instructions.

3.ALL DOCUMENTS MUST BE ISSUED IN ENGLISH

Signed Commercial Invoice for set of Original Clean Shipped on Board Ocean Bill of Lading made out to order of Techcombank / marked Freight Prepaid to Collect

Techcombank / marked Freight Prepaid to Collect and notify

Certificate of Origin issued by

% of invoice value covering all risks and risks showing claim payable in Viet Nam in

Detailed Packing List issued by

Certificate of Quality / Quantity issued by

Shipping Advice sent by fax advising the applicant of shipment particulars (applicant's fax number

The Beneficiary Certificate confirms that a complete set of non-negotiable shipping documents, along with the original, has been dispatched to the applicant via express courier within days following the shipment date An express courier receipt is included for reference.

4 ALL DOCSS MUST BE TITLED AS LC REQUIRED AND DATED

This letter of credit excludes the phrase “A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank” found in Article 6DII of UCP 600 All documents must be presented to the negotiating bank(s) located in the beneficiary's country.

Confirming bank At Techcombank’s Disposal

OCBC SINGAPORE, 65 CHULIA STREET, #09-00 OCBC CENTRE, SINGAPORE 049513 78: Special Clause: TT reimbursement claim: Acceptable Not Acceptable

Chúng tôi uỷ quyền cho Techcombank ghi nợ (các) tài khoản của chúng tôi số:……… để thu phí, chi phí phát sinh có liên quan.

Chúng tôi ủy quyền cho Techcombank tự động trích các tài khoản của chúng tôi để thanh toán mọi khoản chi phí liên quan đến việc mở Thư tín dụng (L/C) theo yêu cầu phát hành L/C, bao gồm trích ký quỹ, thanh toán thư tín dụng đã mở, và các khoản phí phát sinh.

Trong trường hợp Bộ chứng từ không hợp lệ, Techcombank có quyền từ chối thanh toán Nếu chúng tôi gửi văn bản yêu cầu thanh toán chấp nhận BCT không hợp lệ, Ngân hàng có quyền thực hiện thanh toán và chúng tôi cam kết chịu trách nhiệm cho bất kỳ khoản tiền nào Techcombank phải thanh toán theo L/C Chúng tôi ủy thác cho Techcombank lựa chọn Ngân hàng thông báo thứ nhất nếu không có quan hệ đại lý trực tiếp với Ngân hàng thông báo mà chúng tôi đã đề xuất.

Chúng tôi đề nghị ký quỹ 100 % trị giá LC, thanh toán 100 % giá trị LC bằng vốn tự có và 0 % bằng vốn vay tại quỹ Ngân hàng.

The letter of credit opened at this request adheres to the "Uniform Customs and Practice for Documentary Credit 2007 Revision, ICC 600 (UCP 600)" published by the International Chamber of Commerce in Paris, France.

Chỉ thị yêu cầu phát hành thư tín dụng này được lập trên cơ sơ hợp đồng thương mại số……… ngày………….giữa……….

Tuân thủ đầy đủ các chính sách và quy định pháp luật về ngoại hối, xuất nhập khẩu, thanh toán quốc tế của Nhà nước, cũng như các quy định nội bộ của Techcombank Chúng tôi cam kết chịu trách nhiệm hoàn toàn về hạn ngạch, giấy phép xuất nhập khẩu và tính pháp lý của hợp đồng ngoại liên quan.

2 Tuân thủ đúng quy định của Techcombank về việc phát hành L/C, theo đó: xix

71B: Charges All charges outside Viet Nam and reimbursement fees for Applicant

Confirmation fees, if any for Beneficiary's Account Our Account 48: Period for Presentation Within days after the date of shipment but within the validity of the credit

49: Confirmation Instruction Without Confirm May Add

Trong trường hợp Thư tín dụng trả ngay, chúng tôi cam kết chuyển đủ số tiền thanh toán Thư tín dụng cùng các khoản phí phát sinh vào tài khoản của chúng tôi tại Techcombank trong vòng 03 ngày làm việc kể từ khi ngân hàng thông báo đã nhận được bộ chứng từ phù hợp.

Trong trường hợp Thư tín dụng trả chậm, chúng tôi ủy quyền cho Techcombank gửi điện chấp nhận thanh toán BCT phù hợp và cam kết chuyển đủ tiền thanh toán cùng các khoản phí phát sinh vào ngày đến hạn Chúng tôi cũng cam kết hoàn thành mọi thủ tục về tài sản bảo đảm trong vòng 03 ngày làm việc kể từ khi Techcombank thông báo đã nhận được bộ chứng từ phù hợp.

Trong trường hợp Techcombank chấp thuận thanh toán Thư tín dụng bằng vốn vay hoặc cung cấp hạn mức mở thư tín dụng, chúng tôi cam kết thực hiện đầy đủ các thỏa thuận trong Hợp đồng tín dụng và hoàn thành mọi thủ tục nhận nợ vay trong vòng 03 ngày làm việc kể từ khi nhận thông báo từ Techcombank về việc nhận được bộ chứng từ phù hợp Nếu không thu xếp được vốn vay bằng ngoại tệ, chúng tôi sẽ nhận nợ bằng tiền VND và tự mua ngoại tệ để thanh toán Trong trường hợp không đủ điều kiện nhận nợ vay, chúng tôi cam kết chuyển đủ tiền thanh toán Thư tín dụng bằng nguồn vốn tự có trong thời hạn 03 ngày làm việc.

Trong trường hợp Thư tín dụng có xác nhận hoặc cho phép đòi tiền bằng điện, chúng tôi cam kết sẽ chuyển đủ số tiền thanh toán Thư tín dụng và các khoản phí liên quan vào tài khoản tại Techcombank trong vòng 02 ngày làm việc kể từ khi nhận thông báo từ Techcombank về việc đã nhận được điện đòi tiền từ ngân hàng xác nhận hoặc ngân hàng chiết khấu Nếu Thư tín dụng thanh toán bằng vốn tự có, chúng tôi sẽ thực hiện chuyển khoản; nếu thanh toán bằng vốn vay, chúng tôi sẽ hoàn tất các thủ tục nhận nợ vay cần thiết.

- Trong trường hợp Hủy LC, chúng tôi cam kết sẽ tuân thủ mọi thủ tục theo yêu cầu của Techcombank trong việc lấy xác nhận hủy

LC và chỉ yêu cầu rút số tiền ký quỹ khi được tất cả các bên liên quan chấp nhận huỷ L/C.

Chúng tôi ủy nhiệm cho Techcombank tự động thanh toán cho Bên thụ hưởng mọi khoản tiền theo cam kết L/C mà không cần sự chấp thuận hay xác nhận của chúng tôi, nếu nhận được bộ chứng từ hợp lệ vào ngày đến hạn Chúng tôi có trách nhiệm hoàn trả cho Techcombank bất kỳ khoản tiền nào mà ngân hàng này phải thanh toán theo L/C Chúng tôi cam kết không từ bỏ trách nhiệm thanh toán Thư tín dụng trong mọi trường hợp và chịu mọi rủi ro phát sinh, bao gồm cả rủi ro do nguyên nhân bất khả kháng hoặc thay đổi pháp luật, chính sách của Nhà nước.

Chúng tôi đảm bảo thanh toán tất cả các khoản phí và chi phí phát sinh cho Techcombank và/hoặc ngân hàng nước ngoài, bất kể tình huống nào, bao gồm cả khi L/C bị hủy, hết hiệu lực hoặc không được sử dụng Techcombank sẽ chịu trách nhiệm thanh toán các phí và chi phí liên quan đến L/C được phát hành theo yêu cầu này.

5 Để bảo đảm thực hiện các nghĩa vụ phát sinh theo các Cam kết tại Yêu cầu phát hành Thư tín dụng này, Chúng tôi:

Ủy quyền cho Techcombank tự động trích tiền từ tài khoản ngoại tệ của chúng tôi để thanh toán theo Thư tín dụng cho bên thụ hưởng, bao gồm tất cả các khoản phí theo biểu phí của Techcombank và các chi phí liên quan Nếu đồng tiền trên tài khoản ngoại tệ khác với đồng tiền thanh toán theo Thư tín dụng, Ngân hàng có quyền tự động chuyển đổi sang loại ngoại tệ cần thanh toán theo tỷ giá do Techcombank quy định.

Nếu số tiền trong tài khoản và các nguồn thu tại Techcombank không đủ để thanh toán các nghĩa vụ theo Cam kết, hoặc chúng tôi không chuyển đủ tiền để thanh toán bất kỳ nghĩa vụ nào, chúng tôi có trách nhiệm thực hiện các cam kết theo quy định tại điểm 7, 8 dưới đây.

PREPARATION OF THE DOCUMENT PACKAGE

Introduction to documents used in documentary credit

2.1.1 Overview of documents used in documentary credit

A documentary credit is a bank's written commitment to pay a seller on behalf of a buyer, contingent upon the seller meeting the specified terms and conditions In a letter of credit (L/C) transaction, the seller must provide several required documents for payment to be processed The bank must review these documents to ensure they comply with the agreed terms and governing rules Any errors in the documents can hinder payment, making them a crucial element in international trade transactions.

What are the documents used in documentary credit?

- Proof of value of good being imported

The buyer should also have the following:

- Proof of origin of goods

- Financial negotiable instrument to be drawn up by seller in order to make payment to the seller at sight or by acceptance of a draft

So based on the above list,the documents required in an L/C include:

- Draft or Bill of exchange

A bill of exchange is a written, unconditional order from one person to another, requiring payment of a specified sum of money either on demand or at a predetermined time It must be signed by the issuer and can be payable to a designated individual or to the bearer.

A bill of exchange can be categorized into two main types: the at sight bill of exchange, which requires payment by the drawee upon presentation, typically within two business days, and the usance bill of exchange, which mandates payment after a specified period, either from the date of drawing or the date of acceptance.

-Based on the documents attached to the bill of exchange:

+ Clean bill of exchange: A bill of exchange the payment of which is not accompanied by commercial documents This type of B/E is often used to collect freight, collect old debt, …

A documentary bill of exchange is a financial instrument sent alongside commercial documents to an obligor for payment Commonly utilized in the form of Documents against Payment (D/P), it facilitates the collection of funds from buyers on behalf of sellers.

-Based on the negotiable nature of the bill of exchange

+ Nominal B/E: A bill of exchange bearing the beneficiary's name, it cannot be transferred by endorsement

A nameless bill of exchange, also known as a bearer bill, is a financial instrument that does not identify a specific beneficiary Instead, the holder of the bill is considered the beneficiary, allowing for easy transferability through endorsement.

+ Order B/E: A type of bill of exchange that requires the payer to pay to the order of the beneficiary Ordered bill of exchange transferred by statutory endorsement

-Based on the drawee of the bill of exchange

+ Commercial B/E: A bill of exchange drawn by the exporter to demand money from the importer, related to the payment of exported goods or the provision of services

A bank draft, also known as a bill of exchange, is a financial instrument where the issuing bank instructs its correspondent bank to pay a specified amount to the designated beneficiary Notably, this type of draft is non-transferable by endorsement, ensuring that only the intended recipient can access the funds.

A commercial invoice is a crucial international shipping document issued by the supplier to the customer, outlining the type and value of goods sold This document plays a vital role in customs procedures, as it helps determine the duties that need to be paid.

Commercial invoices play an important role in commercial enterprises It is the basis for recording goods purchase and sale activities in the enterprise. Commercial Invoice Functions:

A commercial invoice serves to confirm the payment details between the seller and buyer, or the exporter and importer of goods This essential document establishes a foundation for the transaction.

"claiming money" from the buyer

- Commercial Invoice is a basic document for the calculation of import and export tax

The commercial invoice serves as a crucial reference point for comparing information across various documents in the import and export industry It is essential that the details on the commercial invoice align with those on the declaration sheet, bill of lading, and notice of arrival Any discrepancies must be investigated and corrected to ensure accuracy.

A bill of lading is a crucial legal document provided by a carrier to a shipper, outlining the type, quantity, and destination of the goods being transported It acts as a shipment receipt upon delivery at the specified location This document is essential for all shipped products, regardless of the transportation method, and requires signatures from authorized representatives of the carrier, shipper, and receiver.

The bill of lading is a crucial legal document that outlines essential details for carriers and shippers to effectively manage shipments It serves three primary purposes: it acts as a document of title for the goods, functions as a receipt for the shipped items, and establishes the agreed terms and conditions for transporting the goods.

Insurance documents is a document signed by the insurer, pledging to indemnify the insured

There are three types of insurance documents:

- Insurance Policy: The insurance policy sets out all the terms and conditions of the contract between the insurer and insured

- Certificate of Insurance: It is an evidence of insurance but does not set out the terms and conditions of insurance It is also known as ‘Cover Note’

- Insurance Broker’s Note: It indicates insurance has been made pending issuance of policy or certificate However, it is not considered to be evidence of contract of insurance

A Certificate of Origin (CO) or Declaration of Origin (DOO) is a crucial document in international trade that verifies a product's origin in a specific country Typically prepared by the exporter or manufacturer, this certificate may require official validation from an authorized third party It is essential for customs authorities in the importing country to determine the product's eligibility for entry and potential preferential treatment The International Chamber of Commerce provides global guidelines for the issuance of Certificates of Origin by chambers of commerce.

2.2 Standard for issuance and examination of documents under UCP 600 and ISBP 745

Standard for issuance and examination of documents under UCP 600:

The Uniform Customs and Practice for Documentary Credits, 2007 Revision (ICC Publication no 600), known as the UCP, governs all documentary credits, including standby letters of credit, when explicitly stated in the credit's text These rules are mandatory for all involved parties unless the credit specifically modifies or excludes them.

The issuing bank is obligated to honor a complying presentation of stipulated documents, whether through sight payment, deferred payment, or acceptance, regardless of whether a nominated bank fails to pay or accept a draft Once the credit is issued, the issuing bank is irrevocably bound to honor it Additionally, the issuing bank must reimburse a nominated bank that has honored or negotiated a valid presentation, with reimbursement due at maturity for credits available by acceptance or deferred payment, independent of any prepayment or purchase by the nominated bank.

Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying presentation, the confirming bank must:

A confirming bank is obligated to honor or negotiate a credit when it adds its confirmation, ensuring that it will reimburse any nominated bank that has complied with the presentation requirements This obligation applies regardless of whether the nominated bank has prepaid or purchased before maturity If a nominated bank fails to make a sight payment, deferred payment, or accept a draft, the confirming bank remains responsible for reimbursement at maturity Additionally, if a bank is asked to confirm a credit but is unwilling, it must promptly inform the issuing bank and may advise the credit without confirmation.

Preparing the documents package based on the given L/C

1.Full set (3/3) of original bill of lading marked “freight prepaid”

ADD: 65 Chukia Street,#42-05 OCBC Centre, Singapore 049513

Negotiable fiata Multimodal transport Bill of lading Issued subject to UNCTAD/ICC Rules for Multimodal Transport Documents (ICC Publication 4 Consignee:

TO ORDER OF VIETNAM TECHNOLOGICAL AND COMMERCIAL

Mono-Ammonium Phosphate (MAP) in bags

Notify address (carrier not responsible for failure to notify):

ADD: 121 Nguyen Hue Street, Pho Moi Ward Lao Cai City, Lao

Marks and numbers Number and kind of packages: Description of goods Gross weight (Kg) Measurements (Cbm)

Declaration of Interest of the consignor Declared value for ad valorem rate according to

In timely delivery (Clause 6.2) the declaration of the consignor (C

The goods and instructions are accepted and dealt with subject to the Standard Conditions printed overleaf.

Taken in charge in apparent good order and condition, unless otherwise noted herein, at the place of receipt for transport and delivery as mentioned above

The Multimodal Transport Bill of Lading must be surrendered with the necessary endorsements to receive the goods The original Bill of Lading, dated and signed as indicated, will render any remaining copies void once this process is completed.

Freight amount Freight payable at:

Place and date of issue: 11/08/2022 SINGAPORE xxxv

Cargo insurance through the undersigned Number of Originals Issued

For delivery of goods please apply to:

2.Commercial invoice in triplicate: 2 originals

ADD: 65 CHULIA STREET, #42-05 OCBC CENTRE, SINGAPORE 049513

Invoice No: GOLDEN270817060 Shipped from: SINGAPORE PORT,

Sailling on or about: OCT 04 2022 Shipped to: HAI PHONG PORT, VIETNAM Vessel: HF SPIRIT 2117N

Payment terms: IRREVOCABLE OF DOCUMENTARY CREDIT NO 131086

Bank of Beneficiary: OCBC SINGAPORE, 65 CHULIA STREET, #09-00 OCBC CENTER,

Description of goods Unit Quantity Unit price(USD) Amount

370.00/MT CIF HAIPHONG ACCORDING TO INCOTERMS 2010 74,000.00

In words: USA DOLLAR SEVENTY-FOUR THOUSAND

3.Packing list in triplicate: 02 originals

Invoice No: GOLDEN270817060 Shipped from: SINGAPORE PORT,

Sailling on or about: OCT 04 2022 Shipped to: HAI PHONG PORT, VIETNAM

Payment terms: IRREVOCABLE OF DOCUMENTARY CREDIT NO 131086

Description of goods Unit Quantity G.W MEASUREME

Color : White or off- white powder

4.Insurance policy covered by the seller all risk for 110% invoice value payable in Viet Nam: 02 originals

This insurance policy confirms that, upon payment of an agreed premium to China Life by the Assured for the benefit of the Assignee or others, the Issuer provides coverage for the specified goods This coverage is subject to the General Conditions of Marine Cargo Insurance outlined on the reverse side, as well as any additional conditions stated herein or attached to this document.

NAME AND ADDRESS OF THE ASSURED:

Name and/or No of vessel/flight: HF SPIRIT 2117N Documentary credit (L/C) No :131086

B/L No : SITGJTHP073429 Contract No : VU-ZX91

From: SINGAPORE PORT, SINGAPORE To: HAI PHONG PORT,VIETNAM Sailing on or about: 04/10/2022

Subject matter insured: Mono-Ammonium Phosphate (MAP)

Sum insured:74,000 USD (110% CIF) Premium : 222,000 USD VAT : 22,200 USD(10%)

Premium rate: 0.3% Total amount: 244,200 USD

Clauses, conditions, endorsements and warranties:

INSTITUTE CARGO CLAUSES ( ALL RISKS )

INSTITUTE STRIKES RIOTS AND CIVIL COMMOTIONS CLAUSES

EXCLUDING RUST , OXIDATION , DISCOLOURATION UNLESS DIRECTLY CAUSED BY SINKING , STRANDING , BURNING , COLLISION AND / OR HEAVY WEATHER TERMINATION OF TRANSIT CLAUSE ( TERRORISM )

In the event of loss or damage apply to survey to (16)

Claim payable in HANOI, VIETNAM

By: Singpore Life Insurance (18) CORPORATION

5.Certificate of origin issued by ccpit: 01 original and 01 copy

CERTIFICATE OF ORIGIN Issued in Singapore

121 NGUYEN HUE STREET, PHO MOI WARD,

LAO CAI CITY, LAO CAI PROVINCE,

INVOICE Mono-Ammonium Phosphate (MAP)

NO : TPV03-02/EX DATE: SEP 21TH 2022

WINSTON WU ONE MEMBER LTD here by certifies that above mention goods are of Singapore origin

Certificate of Quality and Quantity/Weight/container cleanliness in one

International payment plays a crucial role in facilitating the exchange of goods and services across borders It is essential for the growth and sustainability of foreign economic activities Efficient, secure, and precise international payment operations enhance the relationship between buyers and sellers, ensuring a seamless flow of goods and currency.

Under the passionate guidance of lecturer Luong Thi Kim Oanh, we have gained valuable insights into international payment processes, various types of credit, and payment methods Additionally, we have deepened our understanding of international accounting and explored the human resource management strategies employed by multinational companies.

Our limited knowledge of English may lead to unavoidable mistakes and grammatical errors in expressing our thoughts Therefore, we appreciate your enthusiastic guidance in helping us correct these errors Thank you for your support!

1 Vietnam Maritimes University – Textbook of International Payment

2 Techcombank – Procedure to open a letter of credit at Techcombank

- Form of bill of lading to issue L/C

3 Sitc carrier – Bill of lading xlv

1.Timeline of the set of documents prepared by the importer

2.Timeline of documents prepared by exporter

EXPIRY OF LC in Singapore

Contract No.：HP/MAP01082022 Date 1st AUG 2022 ：

SELLER: GOLDEN BARLEY INTERNATIONAL PTE LTD

ADD 65Chulia Street, #42-05 OCBC Centre, Singapore 049513：

BUYER : MINH CHAU CO.,LTD

Deputy General director: Nguyen Minh Khoi

This contract is established between the Buyer and the Seller, in which the Buyer agrees to purchase and the Seller agrees to sell the specified commodity under the outlined terms and conditions.

The Seller agrees to sell and deliver 200.00 MT of Mono-Ammonium Phosphate (MAP) in bags, allowing for a variation of 10% more or less in both quantity and total amount at the Seller's discretion, while the Buyer commits to purchasing and accepting the delivery.

The price for MAP fertilizer is USD 370.00/MT CIF HAIPHONG ACCORDING TO INCOTERMS 2010

3.TOTAL VALUE : USD 74,000.00（Total say U.S DOLLAR SEVENTY-FOUR THOUSAND ONLY）

Time of delivery: The commodity shall be delivered in multiple shipments before or within 60 days after the L/C issued.

- The Seller Company has responsibility for loading, shipping and local transportation.

- Latest date of shipment: Oct 4th, 2022

- Loading port: Singapore Port, Singapore

- Destination port: Haiphong Port, Vietnam。

- Partial shipment is not allowed.

-The number of packages contained in a single container : 500 packages ( full container loading – 20’ FCL) , as a result, each container stores 25.00 MT regardless of the pallet

-Net Weight of each bag : 50 kg per bag

4) Full set (3/3) of original bill of lading marked “freight prepaid”

5) Commercial invoice in triplicate: 2 originals

6) Packing List in 3 original and 3copies.

11.1 This contract shall come into effect from the signing date, any amendment and additional clause to these conditions shall be valid only if made in written form and duly confirmed by both sides.

11.3 This contract is subject to the General Terms and Conditions set forth herewith which form an integral part of this contract Faxed signed contract is deemed to be valid.

40A: From of Documentary Credit Back to back Revolving Transferable Irrevocable 31D: Date and Place of Expiry 221019 In: SINGAPORE

50: Applicant (full name and address):

59: Beneficiary (full name and address):

By Negotiation Acceptance Payment Deffer Payment

Sight days after … for 100 % of Inv Value of goods Drafts not required drafts required

44A: Loading on Board/Dispatch … at/from SINGAPORE PORT,SINGAPORE

44B: For Transportation to … ANY PORT(S) IN HAIPHONG, VIETNAM

Terms of Shipment: FOB CIF CIP FCA CFR EWX DAF

Signed Commercial Invoice for 02 ORIGINAL In TRIPLICATE

The full set of original Clean Shipped on Board Ocean Bill of Lading is issued to the order of Techcombank This original bill of lading is marked as Freight Prepaid to Collect, and it is essential to notify the applicant while indicating the country of the loading port.

Clean Air Waybill / Showing flight number and flight date consigned to

Techcombank / marked Freight Prepaid to Collect and notify Applicant in

Certificate of Origin issued by CCPIT in 01 originals and 01 copy C/O must not be hand-written except for signature.

The insurance policy must be in an assignable form, endorsed in blank, and cover 110% of the invoice value against all risks It should clearly indicate that claims are payable in Vietnam, in the currency of the invoice, and must display the total number of originals issued.

Detailed Packing List issued by 02 ORIGINALS in TRIPLICATE

Certificate of Quality / Quantity issued by in

Shipping Advice sent by fax advising the applicant of shipment particulars (applicant's fax number ……… )

Beneficiary Certificate certifying that one set of non-negotiable shipping documents plus original

have been sent by express courier to applicant within days after the date of shipment A related express courier receipt enclosed.

5 THIS LC EXCLUDE THE PHRASE “A PLACE FOR PRESENTATION OTHER THAN THAT OF THE ISSUING BANK IS IN ADDITION TO THE PLACE OF THE ISSUING BANK” IN ARTICLE 6DII OF UCP 600 ALL DOCS MUST BE PRESENTED TO THE NEGOTIATING BANK (S) AT BENEFICIARY’S COUNTRY

Confirmation fees, if any for Beneficiary's Account Our Account 48: Period for Presentation Within 21 days after the date of shipment but within the validity of the credit

May Add Confirming bank At Techcombank’s Disposal

57D: Advising Bank OCBC SINGAPORE, 65 CHULIA STREET, #09-00 OCBC CENTRE, SINGAPORE 049513

78: Special Clause: TT reimbursement claim: Acceptable Not Acceptable

Chúng tôi ủy quyền cho Techcombank tự động trích từ các tài khoản của chúng tôi để thanh toán tất cả các khoản tiền liên quan đến việc mở Thư tín dụng (L/C) theo yêu cầu phát hành L/C, bao gồm trích ký quỹ, thanh toán thư tín dụng đã mở, và các khoản phí, chi phí phát sinh.

Trong trường hợp Bộ chứng từ không hợp lệ, Techcombank có quyền từ chối thanh toán Nếu chúng tôi gửi văn bản yêu cầu thanh toán chấp nhận BCT không hợp lệ, Ngân hàng có quyền thực hiện thanh toán và chúng tôi cam kết chịu trách nhiệm cho bất kỳ khoản tiền nào Techcombank phải thanh toán theo L/C Chúng tôi ủy thác cho Techcombank lựa chọn Ngân hàng thông báo thứ nhất nếu không có quan hệ đại lý trực tiếp với Ngân hàng thông báo mà chúng tôi đã đề xuất.

Packing list

11.1 This contract shall come into effect from the signing date, any amendment and additional clause to these conditions shall be valid only if made in written form and duly confirmed by both sides.

11.3 This contract is subject to the General Terms and Conditions set forth herewith which form an integral part of this contract Faxed signed contract is deemed to be valid.

40A: From of Documentary Credit Back to back Revolving Transferable Irrevocable 31D: Date and Place of Expiry 221019 In: SINGAPORE

50: Applicant (full name and address):

59: Beneficiary (full name and address):

By Negotiation Acceptance Payment Deffer Payment

Sight days after … for 100 % of Inv Value of goods Drafts not required drafts required

44A: Loading on Board/Dispatch … at/from SINGAPORE PORT,SINGAPORE

44B: For Transportation to … ANY PORT(S) IN HAIPHONG, VIETNAM

Terms of Shipment: FOB CIF CIP FCA CFR EWX DAF

Signed Commercial Invoice for 02 ORIGINAL In TRIPLICATE

The full set of original Clean Shipped on Board Ocean Bill of Lading is issued to the order of Techcombank This original bill of lading is marked as Freight Prepaid to Collect, and it is essential to notify the applicant while indicating the country of the loading port.

Clean Air Waybill / Showing flight number and flight date consigned to

Techcombank / marked Freight Prepaid to Collect and notify Applicant in

Certificate of Origin issued by CCPIT in 01 originals and 01 copy C/O must not be hand-written except for signature.

The insurance policy must be in an assignable form, endorsed in blank, and cover 110% of the invoice value against all risks It should clearly indicate that claims are payable in Vietnam, in the currency of the invoice, and must display the total number of original documents issued.

Detailed Packing List issued by 02 ORIGINALS in TRIPLICATE

Certificate of Quality / Quantity issued by in

Shipping Advice sent by fax advising the applicant of shipment particulars (applicant's fax number ……… )

Beneficiary Certificate certifying that one set of non-negotiable shipping documents plus original

have been sent by express courier to applicant within days after the date of shipment A related express courier receipt enclosed.

5 THIS LC EXCLUDE THE PHRASE “A PLACE FOR PRESENTATION OTHER THAN THAT OF THE ISSUING BANK IS IN ADDITION TO THE PLACE OF THE ISSUING BANK” IN ARTICLE 6DII OF UCP 600 ALL DOCS MUST BE PRESENTED TO THE NEGOTIATING BANK (S) AT BENEFICIARY’S COUNTRY

Confirmation fees, if any for Beneficiary's Account Our Account 48: Period for Presentation Within 21 days after the date of shipment but within the validity of the credit

May Add Confirming bank At Techcombank’s Disposal

57D: Advising Bank OCBC SINGAPORE, 65 CHULIA STREET, #09-00 OCBC CENTRE, SINGAPORE 049513

78: Special Clause: TT reimbursement claim: Acceptable Not Acceptable

Chúng tôi ủy quyền cho Techcombank tự động trích các tài khoản của chúng tôi để thanh toán mọi khoản tiền liên quan đến việc mở Thư tín dụng (L/C) theo yêu cầu phát hành L/C, bao gồm trích ký quỹ, thanh toán thư tín dụng đã mở, và các khoản phí, chi phí phát sinh.

Trong trường hợp Bộ chứng từ không hợp lệ, Techcombank có quyền từ chối thanh toán Nếu chúng tôi gửi văn bản yêu cầu thanh toán cho Ngân hàng, dù BCT không hợp lệ, Ngân hàng vẫn có quyền thực hiện thanh toán và chúng tôi cam kết chịu trách nhiệm cho bất kỳ khoản tiền nào Techcombank phải thanh toán theo L/C Chúng tôi ủy thác cho Techcombank lựa chọn Ngân hàng thông báo thứ nhất nếu không có quan hệ đại lý trực tiếp với Ngân hàng mà chúng tôi đã đề xuất.

The letter of credit opened at this request adheres to the "Uniform Customs and Practice for Documentary Credit 2007 Revision, ICC 600 (UCP 600)" published by the International Chamber of Commerce in Paris, France.

Chỉ thị yêu cầu phát hành thư tín dụng này được lập trên cơ sơ hợp đồng thương mại số……… ngày………….giữa……….

10 Tuân thủ đúng và đầy đủ các chính sách, quy định pháp luật về ngoại hối, xuất nhập khẩu, thanh toán quốc tế của Nhà nước và các quy định nội bộ của Techcombank; Cam kết hoàn toàn chịu trách nhiệm về hạn ngạch, giấy phép xuất nhập khẩu và tính pháp lý của hợp đồng ngoại liên quan.

11 Tuân thủ đúng quy định của Techcombank về việc phát hành L/C, theo đó: liii

Trong trường hợp Thư tín dụng trả ngay, chúng tôi cam kết chuyển đủ số tiền thanh toán Thư tín dụng cùng các khoản phí phát sinh vào tài khoản của chúng tôi tại Techcombank trong vòng 03 ngày làm việc kể từ khi ngân hàng thông báo đã nhận được bộ chứng từ phù hợp.

Trong trường hợp Thư tín dụng trả chậm, chúng tôi ủy quyền cho Techcombank gửi điện chấp nhận thanh toán BCT phù hợp và cam kết chuyển đủ tiền thanh toán cùng các khoản phí phát sinh vào ngày đến hạn Chúng tôi cũng cam kết hoàn thành mọi thủ tục về tài sản bảo đảm trong vòng 03 ngày làm việc kể từ khi Techcombank thông báo đã nhận được bộ chứng từ phù hợp.

Trong trường hợp Techcombank chấp thuận thanh toán Thư tín dụng bằng vốn vay, chúng tôi cam kết thực hiện đầy đủ các thỏa thuận trong Hợp đồng tín dụng và hoàn thành mọi thủ tục nhận nợ vay trong vòng 03 ngày làm việc kể từ khi nhận được thông báo từ Techcombank Nếu không thu xếp được vốn vay bằng ngoại tệ, chúng tôi sẽ nhận nợ bằng VND và tự mua ngoại tệ để thanh toán Nếu không đủ điều kiện nhận nợ vay, chúng tôi cam kết chuyển đủ tiền thanh toán Thư tín dụng bằng nguồn vốn tự có trong thời hạn 03 ngày làm việc.

Tiêu đề	Dissertation international payment application for letter of credit issuance
Tác giả	Vu Thi Thuy Dung, Tran Hai Yen
Người hướng dẫn	Luong Thi Kim Oanh
Trường học	Vietnam Maritime University
Chuyên ngành	International Business
Thể loại	Dissertation
Năm xuất bản	2022
Thành phố	Hai Phong

Định dạng
Số trang	75
Dung lượng	4,63 MB