Silde thuyết trình TACN2 Topic: Letter of credit

Commerce Slides I II III DEFINITION OF LETTER OF CREDIT CLASSIFICATION OF LETTER OF CREDIT PROCEDURE TO OPEN A LETTER OF CREDIT CONTENT IV V PROCEDURE OF PAYMENT BY LETTER OF CREDIT PRA

EXPORTING AND EXPORT CONTRACT

LETTER OF CREDIT

Commerce Slides

I II III

DEFINITION OF LETTER OF CREDIT

CLASSIFICATION OF LETTER OF CREDIT

PROCEDURE TO OPEN A LETTER OF CREDIT

CONTENT

IV V

PROCEDURE OF PAYMENT BY LETTER OF CREDIT

PRACTICE

DEFINITION OF LETTER OF CREDIT

[Clip]

Importer

A Advising

Commerce Slides

- Published by ICC – International Chamber of Commerce.

- Called UCP , Uniform Custom and Practice for Documentary credit,

which is regularly updated by ICC.

- The latest version is UCP 600.

- The rules have been effective since 1 July 2007.

LETTER OF CREDIT RULES

CLASSIFICATION OF LETTER OF CREDIT

- Can be cancelled at any time by the buyer

or by the issuing bank

- Not used frequently

- UCP 600 has no reference to

revocable letters of credit

- Cannot be cancelled without the agreement of the credit parties

- A financial instrument used by banks to guarantee a buyer's obligations to a seller

3 - Often used to facilitate international trade

2

- At least two banks guarantee payment

- A confirmed LC is preferred when the

seller is not able to ensure payment from the

issuing bank.

- Costly.

- The advising bank merely informs the seller of the L/c terms and conditions.

1 - The buyer instructs issuing bank to

issue a L/C in favour of the seller

- Only the issuing bank guarantees payment

1

- The buyer instructs an issuing bank to

instruct an advising bank to pay under a

L/C in favour of the seller.

- payable immediately – more or less –

after the seller meets the requirements of

the L/C.

- The quickest form of payment for the

sellers.

- The seller needs to submit documents to

the bank (ex: a bill of lading).

- It is used in case the buyer & the seller have

a close working relationship.

- Use the deferred payment - the seller allows the issuing bank a grace time to pay full

amount.

3 - No drafts are involved but the payment is

guaranteed on the stated date

OTHER TYPES

PROCEDURE TO OPEN

A LETTER OF CREDIT

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PROCEDURE TO OPEN A LETTER OF CREDIT

17 SET OF DOCUMENTS

18 TIME TO PRESENT

DOCUMENT

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PROCEDURE OF PAYMENT BY LETTER OF CREDIT

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PROCESS

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THE L/C’ S ASSOCIATED DOCUMENTATION

The ICC suggests that documents are listed in a certain order:

nvoice Transport document Insuran ce docum

ent

Other documents such as : certificate of origin, certificate

of analysis, packing list, etc.

1 Actual cost of the goods can increase

due to effects of currency fluctuations.

Costs involved can make L/C expensive.

A letter of credit shows solvency for

the buyer, and allows them to reduce

or eliminate an initial payment

The buyer is certain to receive the goods

stipulated in the letter of credit

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COMPARISON

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TRANSLATE INTO VIETNAMESE/ENGLISH

1 The beneficiary shall be liable to check credit terms carefully In case of the beneficiary does not agree with the terms and conditions or cannot

comply with any of terms and conditions, he shall be liable to arrange for the amendments of the L/C through his contract partner (who has asked

the bank to open L/C)

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PRACTICE

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QUESTIONS

1 What is the clause bill of lading?

A bill of lading that shows a shortfall or damage in the delivered goods

Typically, if the shipped products deviate from the delivery specifications

or expected quality, the receiver may declare a clause bill of lading

Question

Answer

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QUESTIONS QUESTIONS

2 According the ICC, What documents a letter of credit require?

Commercial invoice, Transport document, Insurance document, other documents such as: Certificate of origin, packing list, etc

Question

Answer

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TRANSLATE INTO VIETNAMESE/ENGLISH

does not agree with the terms and conditions or cannot comply with any of terms and

conditions, he shall be liable to arrange for the amendments of the L/C through his

contract partner (who has asked the bank to open L/C)

Trong trường hợp người hưởng lợi không nhất trí với những điều kiện và điều khoản hoặc cảm thấy không thể tuân thủ bất cứ một trong những điều kiện và điều khoản thì anh ta chịu trách nhiệm sắp xếp sửa đổi thư tín dụng thông qua đối tác hợp đồng của anh

ta (chính là người xin mở thư tín dụng)

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TRANSLATE INTO VIETNAMESE/ENGLISH

2 The seller shall make the first shipment within 30 days from the date the seller receives notification of an Irrevocable L/C

which has been issued in his favour.

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TRANSLATE INTO VIETNAMESE/ENGLISH

2 The seller shall make the first shipment within 30 days from the

date the seller receives notification of an Irrevocable L/C which has been issued in his favour.

Bên bán phải giao chuyến hàng đầu tiên trong vòng 30

ngày kể từ ngày bên bán nhận được thông báo bên mua đã

mở một thư tín dụng cho bên bán hưởng.

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TRANSLATE INTO VIETNAMESE/ENGLISH

3 Việc thanh toán sẽ được thực hiện bằng một thư tín dụng

không hủy ngang Thư này tuân thủ theo Quy tắc thực hành

thống nhất về tín dụng chứng từ và ràng buộc ngân hàng phát hành tuân thủ các điểu kiện của thư tín dụng.

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TRANSLATE INTO VIETNAMESE/ENGLISH

3 Việc thanh toán sẽ được thực hiện bằng một thư tín dụng không hủy ngang

Thư này tuân thủ theo Quy tắc thực hành thống nhất về tín dụng chứng từ và

ràng buộc ngân hàng phát hành tuân thủ các điểu kiện của thư tín dụng.

 Payment for the goods shall be made by an irrevocable letter of credit

This letter shall comply with the UPC600 binding issuing bank to comply

with terms and condition of L/C.

Commerce Slides

Cash on delivery – COD : thanh toán khi nhận hàng Cash on delivery – COD : thanh toán khi nhận hàng Cash in advance : trả tiền trước

Cash with order : Trả lúc kí hợp đồng hoặc đặt hàng Payment guarantee: Bảo lãnh thanh toán

Tender guarantee : Bảo lãnh dự thầu Performance guarantee : Bảo lãnh thực hiện hợp đồng Prepayment guarantee : Bảo lãnh tiền ứng trước

Demand guarantee: Bảo lãnh theo yêu cầu ECI – Export credit Insurance : Bảo hiểm tín dụng xuất khẩu Certificate of origin – C/O : Giấy chứng nhận xuất xứ hàng hóa

PHRASES

•Cash in advance : trả tiền trước

•Cash in advance : trả tiền trước

ECI – Export credit Insurance : Bảo hiểm tín dụng xuất khẩu Certificate of origin – C/O : Giấy chứng nhận xuất xứ hàng hóa

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