Matters Needing Attention Before Letter Of Credit Is Used

1. careful choice

When looking for trading partners and trade opportunities, we should contact and understand customers as far as possible through formal channels, such as attending Canton Fair and field visits, not to do business with clients with unclear credit or bad credit.

2. make clear the contents of the letter of credit in the sales contract ahead of time.

The sales contract is the basis of the letter of credit. The contents of the letter of credit received by the exporter can be clearly stipulated in the sales contract in advance.

Generally include: opening date (open to date); letter of credit validity (15 days after shipment, due at the port of export); stipulate the issuing bank, confirming bank (under certain conditions); specify the type of the letter of credit (irrevocable, immediate, pferable, etc.); the name and number of the prepared documents; allow partial shipment (not to limit the interval between each shipment interval, such as 30 days per batch); stipulate that the exporter has the right to amend the terms of the letter of credit in accordance with the contract, and if the importer does not comply with the requirements, the exporter has the right to make damages.

3. Carefully arrange the ways and conditions for the development of letters of credit.

In the letter of credit paction, the seller must strictly comply with the conditions stipulated in the letter of credit to pay the shipping documents before obtaining the payment.

Therefore, when concluding a sale and purchase contract, the seller must make careful arrangements and choices for the development methods and conditions of the relevant letter of credit, and arrange as much as possible to arrange the development of the letter of credit according to his own satisfaction, and have absolute grasp of the conditions of the letter of credit, and do not make or require modifications to the conditions that are not fulfilled.

For example, the buyer should be required to develop the letter of credit as soon as possible after the purchase and sale contract is concluded, so that there will be sufficient time to arrange production, purchase or shipment.

For the new customer, it is necessary to request the other party to apply for a letter of credit for the development of a L / C before or after the application of the L / C to develop a copy or photocopy of the "letter of credit development application" (ApplicationforlitterofCredit) and send it by air mail so as to have a full time and check whether the content is appropriate.

The exporter and the bank need to conduct a careful examination of the letter of credit. There are two main aspects in the scope and contents of the review. First, check whether the contents of the letter of credit are consistent with the sales contract, and find out the contents and the unenforceable clauses that must be quickly requested for the importer to make the amendment.

Second, examine the reliability of a letter of credit.

Such as the authenticity of the letter of credit, the credit of the issuing bank, the type of the letter of credit, the entry into force of the letter of credit, etc.

The name, address and credit status of the issuing bank are compared with the bank Yearbook, and the suspicious points are immediately queried to the issuing bank or the correspondent bank to ensure the authenticity and legality of the certificate and the reliability of the issuing bank.

According to the provisions of the eighth provision of the uniform convention, the advising bank shall check the authenticity of the letter of Credit advised by the advising bank reasonably and cautiously.

Therefore, the advising bank is responsible for identifying the authenticity of the letter of credit.

In practice, the advising bank often has to grasp the signature sample of the issuing bank, and use the Global Banking Financial Telecommunication Association (SW T) to ensure the authenticity of the letter of credit, so the seller can implement the case to the advising bank.

In China, if a foreign importer sends the letter of credit directly to the exporter, the exporter should send the letter of credit to the Bank of China to check the seal and record it, and confirm the authenticity of the letter of credit by the Bank of China.

Our bank of China requires that the pfer of L / C must be made by the issuing bank or pferred to the Bank of China.

In addition, the seller may request the buyer or the issuing bank to invite others who are more familiar or creditworthy.