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Letters of Credit for Export

Protecting the Beneficiary
  • Stephen A. JonesEmail author
Chapter
  • 7 Downloads

Abstract

The primary concern of a seller is whether they will be paid by the buyer for the shipment of goods. A letter of credit provides an independent payment undertaking of a bank, subject to the presentation of complying documents. For the seller, it is often said that ‘the documents are more important than the goods’.

If the documents do not fully conform to the credit, this is known as a ‘discrepant’ presentation which at best can result in delayed payment and at worst in rejection of documents and no payment.

This chapter discusses the optimum structure of the export letter of credit to mitigate risk for the seller and to provide a pre-shipment finance or post-shipment discount or negotiation solution. The same trading scenario is examined in Chap.  5 to illustrate the key differences in structure between an export and import letter of credit.

Keywords

Acceptance Any bank by negotiation Assignment of proceeds Availability Bank to bank reimbursement Bill of lading Cargo insurance Confirmation Contract of carriage Control over the goods Deferred payment Discount finance Discrepancy waiver Discrepant presentation Document rejection Documentary risk Documents Export letter of credit Letter of credit terms Negotiation Place of expiry Presentation period Pre-shipment finance Reimbursement authorisation Unconfirmed credit 

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.AXS Trade Finance Ltd.Solihull, West MidlandsUK

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