Chapter 14 - PARTIES OF ADVANCE PAYMENT & OPEN ACCOUNT

Buyer

·         One who buys the Goods and pays the Seller for that.

Seller

·         One who sells the Goods and receives money from Buyer.

Buyer Bank and Seller Bank

·         Funds Transfer from Buyer to Seller.

CHAPTER 13 - BENEFITS OF DOCUMENTARY CREDIT

General

·         It is an irrevocable and unconditional undertaking of a bank (Issuing Bank).

·         Issued at the request of the applicant (buyer).

·         To make payment to the beneficiary (seller).

·         On presentation of documents complying with the terms and condition of the credit, UCP & ISBP.

Benefits to the Applicant

·         Provides assurance to the applicant (buyer) that payment will be released only on presentation of credit compliant documents.

·         Financing facilities from the Bank.

Benefits to the Beneficiary

·         Gives assurance to the beneficiary (seller) that payment will be made if complying documents are presented.

·         Risk of default or non-payment is shifted from the buyer to the issuing bank.

·         Control of goods rests with the Bank.

·         Financing facility from the Bank.

Chapter 12 - GENERAL - DOCUMENTARY CREDIT

UCP600 governs the operation of Documentary Credit or Letter of Credit.

An irrevocable undertaking by which the issuing bank guarantees payment to the beneficiary or beneficiary’s Bank, that if documents presented to them by the beneficiary or beneficiary’s Bank complying with the terms and conditions of the letter of credit.

Documentary Credits - Sight - Documents against Payment (D/P)

Settlement of payments through the medium of Documentary Credit involves dispatch of goods by the seller to the Bank issuing the Documentary Credit (the issuing Bank) and forwarding the documents to the issuing Bank through his bank for obtaining payment from the buyer.

Sight payment means that payment should be made when the Document presentation is seen or sighted. It also means that payment should be made on demand.

Documentary Credits -Usance - Documents against Acceptance (D/A)

Settlement of payments through the medium of Documentary Credit involves dispatch of goods by the seller to the Bank issuing the Documentary Credit (the Issuing Bank) and forwarding the documents to the Issuing Bank through his bank for obtaining payment from the buyer.

Usance payment means that payment should be made in a Future determined date.