Sunday, November 14, 2010
Friday, August 31, 2007
Sunday, June 17, 2007
Documentary; Merchandise, Commercial, Trade
The majority of LCs issued are in payment for goods in shipment or current services performed. Payment is normally made against documents for goods shipped. (Article 1&2, UCP 500)
Normally, this type of LC functions like a guarantee. This type of credit can be drawn against only upon performance of service or financial obligation default. It is a definite undertaking of the issuing bank. Similar to commercial LCs, standby's are governed by the International Standby Practices 1998 (ISP98)
A revocable letter of credit may be amended or canceled by the issuing bank at any moment and without prior notice to the beneficiary (Article 6 & 8, UCP 500)
Bears only the obligation of the issuing bank. The beneficiary should look to the credit worthiness of only the issuing bank, and not to any intermediary (Article 9, UCP 500)
Is a credit in which a second obligation is added to the letter of credit by another bank (Article 9, UCP 500)
Payment is at sight, which means that the drafts and documents are honored, if in order, by making payment without delay.
The draft honored by accepting it for payment at a future date. Payment is delayed until the maturity of the draft.
Can be transferred by the original beneficiary to one or more other parties. It is normally used when the first beneficiary does not supply the merchandise himself, but is a middleman and wants to transfer all or part of his rights to the actual supplier (Article 48, UCP 500)
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A documentary credit is a (conditional) bank undertaking of payment. It is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request, and on the instructions of the buyer (applicant) to pay at sight or at a determinable future date up to a stated sum of money, within a prescribed time limit and against stipulated documents or other conditions. The issuing bank is putting out its credit and good name for the sake of the buyer.
Because the documentary credit is a bank undertaking, the seller can look to the bank for payment, instead of relying upon the ability or willingness of the buyer to pay. However, because the undertaking is conditional, the seller only has the right to demand payment if he meets all the requirements of the credit. It is, therefore, unwise for the seller to proceed with shipment until he is aware of these requirements and is satisfied he can meet them.
Because the documentary credit is a conditional undertaking, payment is made on behalf of the buyer against documents, which may represent the goods and give the buyer rights to them.
Documentary credits therefore:
· Are an arrangement by banks for settling international commercial transactions.
· Ensure payment, provided that the terms and conditions of the letter of credit have been fulfilled.
· Mean that payment by such means is based on documents only, and not on merchandise or services involved.
· Provide a form of security for the parties involved.
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First Private Funder and other Partners
First Private Funder (FPF) arrange Letters of Credit to client businesses.
FPF facilitates and manages the process of the opening of Letters of credit on behalf of its clientele, and continues the ongoing management of the letter of credit process throughout the period for which a transaction may occur.
The services offered have facilitated excellent relationships between the clients of FPF and their overseas suppliers, thus allowing the growth of certain business segments which companies would otherwise not have the ability to pursue. This past year FPF has opened hundreds of Letters of Credit on behalf of clients based in North America, Europe, the Middle East and
Through its strong banking relationships in which world banking institutions work in conjunction with FPF's expert staff, the company avails itself of the foremost experts in the World of Trade Finance, and the criteria set forth in UCP 500 for documentary LC's and ISP98 for standby Letters of Credit. These alliances help to create opportunities for growth and profitability the client companies.
FPF clients import items ranging from commodity goods to apparel and textiles, and electronic components to consumer appliances and specialty products. The Letters of Credit are opened to suppliers in Asia, Africa,
If your company is looking for a strategy to finance goods to fill your orders, or simply to support growth, contact our representatives
First Private Funder can assist with any company's international trade finance needs by providing documentary letters of credit to assist with Corporate cash flow requirements. Our company can open letters of credit to fulfill inventory financing needs for large and small purchase orders through our purchase order financing scheme, and to provide an enhancement to current banking arrangements. Our expert staff can work with clients to arrange their transfer letters of credit, performance guarantee requirements, cash against document requests and other such trade instruments by using our extensive global banking contacts facilities. Please go to the application form section of this site to initiate a letter of credit arrangement with Funder Partners or feel free to contact us through any of the company's offices. /