(2) The limitations of the letter of credit A. Inability to provide absolute security B. Being more expensive than other forms of payment
Trade Terms
• The letter of credit may not be the most ideal method of payment for a particular transaction, and the contraction parties should make their best choice according to the specific conditions.
International Business English Lesson 12 The Letter of Credit (II)
Business Knowledge
(1) Major types of credits and their functions, forms and mechanism A. Clean credit and documentary credit B. Revocable credit and irrevocable credit C. Confirmed credit and unconfirmed credit D. Sight credit and usance credit E. Transferable credit and non-transferable credit F. Non-draft credit G. Revolving credit
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7. Confirmed credit 保兑信用证: The credit is confirmed by a bank other than the issuing bank 8. Leading bank (Prime bank, First rate bank) 主要银行 9. Sight credit 即期信用证: The credit by which payment can be made upon presentation of the draft and impeccable documents by the beneficiary to the bank. ance credit (Term credit, Time credit) 远期信用证 :The credit by which payment cannot be made until a specific date or a specific time after the date of after sight. 11.Capital turnover 资金周转 12.Face value 面值
17. Deferred payment 延期付款 18. Revolving credit 循环信用证: The credit stipulated that its amount can be renewed or reinstated without specific amendment to the credit being made. 19. Insolvent 无支付能力的 20. The documentary credit 跟单信用证: The credits that require shipping documents to be presented together with the draft. 21. A particular transaction 一笔特定的交易
• Letters of credit are classified into different types according to their function, form and mechanism.
• Clean letters of credit are mainly used in non-trade settlement, while the documentary credits are generally used in commodity trade.
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13. Transferable credit 可转让信用证: The credit can be transferred by the original beneficiary to one or more parties. 14. Non-transferable credit 不可转让信用证: The credit can not be transferred. 15. Non-draft credit 无汇票信用证: The credit that payment of to be made by presentation of the documents without the formality of drawing and presenting a draft. 16. Discount 折扣
• A little of credit is called transferable if it can be transferred by its original beneficiary to one or more parties. The original beneficiary is called the first beneficiary and the party (or parties) the credit is transferred to is called the second beneficiary.
• • • 1. Clean credit 光票信用证: The credits only require clean draft. 2. Non-trade settlement 非贸易结算 3. Revocable credit 可撤消信用证: The credits can be altered or even canceled without consulting with the beneficiary. 4. Irrevocable credit 不可撤消信用证: The credits can not be amended or revoked without the consent of all the parties concerned. 5. Maturity 到期，满期 6. Nationalize 国有化
• In theபைடு நூலகம்case of sight credits, payment can be made promptly upon presentation of draft and impeccable documents.
• A usance credit obviously calls for a time draft, and the usance varies from 30, 60, to as long as 180 days.