acceptance letter of credit.pdf

8/20/2019 Acceptance Letter Of Credit.pdf

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Acceptance Letter Of Credit A draft (or a bill of exchange) accepted by the drawee (acceptor) by putting his signature and 'accepted' on its face. In doing so, hecommits himself to pay the bill upon presentation at maturity.

Advising Bank This bank is a correspondent of a bank which issues a letter of

credit, and, on behalf of the issuing bank, this bank notifies the beneficiary of the terms of the credit, without engagement on itspart to pay or guarantee the credit.

Anti-dumping Laws Statutes enacted to prevent dumping - offering prices in theoverseas market that is lower than that at which a product is soldin its home domestic market.

Applicant

One who applies to his bank to issue a documentary credit; in themajority of credits issued the applicant is an importer of goods.

Bank (ers) Acceptance

A time draft drawn on, and accepted by, a bank. They are limitedto 6 months in the US. They may be kept to maturity or sold.

Beneficiary A payee or recipient, usually of money. A party in whose favour a

documentary credit is established, usually the exporter.

Carriage, insurance paid to (CIP) An INCOTERM indicating the Seller delivers the goods to thenamed carrier but the Seller must also pay the cost of carriagenecessary to bring the goods to the named destination andminimum insurance against damage or loss in transit.

Carriage paid to (CPT) An INCOTERM indicating the Seller delivers the goods to thenamed carrier but the Seller must also pay the cost of carriagenecessary to bring the goods to the named destination.

Cash Against Documents (CAD) A term used in collections supported by shipping documents which are released to the Buyer only against payment. Same asDocuments Against Payment (D/P).



Cash in Advance (CIA) A credit term where Buyer pays for the merchandise or servicesin full before shipment or any service benefits can be derived.

C.O.D.

Collect on Delivery, a service where the purchase price of ashipment is collected by the carrier upon delivery of theshipment and subsequently paid to the shipper.

Collecting Bank A bank involved in the collection process. In this process ifpresentation is made to the drawee, it also becomes 'thepresenting bank'.

Commercial Bank In the USA, a bank that is authorized to accept demand deposits.It may also receive time deposits, make loans, engage in trustservices, issue letters of credit, accept and pay drafts, rent safedeposit boxes and engage in many other similar activities.

Confirmed Letter of Credit A L/C issued by a foreign bank whose validity has beenconfirmed by a domestic bank. This is in addition to thecommitment of the opening bank.

Confirming house

Primarily European entities that use their credit where theirclient has customers with a high cost of funds or are located in acountry with an uncertain credit environment.

Consignment Goods or property sent by the aid of a carrier from one person(the consignor) to another (the consignee).

Correspondent Bank A bank that, in its own country, handles the business of a foreign bank.

Cost and freight (CFR) An INCOTERM indicating the cost of the product and freight isincluded in the Seller's quoted price to a named destination. Allother charges are the Buyer's responsibility.

Cost, insurance and freight (CIF)



An INCOTERM indicating the cost of the product, minimuminsurance, and freight is included in the Seller's quoted price to anamed destination. All other charges are the Buyer'sresponsibility.

Delivered Duty Unpaid... named place of destination (DDU) An INCOTERM indicating the Seller has fulfilled its obligation to

deliver when the goods have been made available at the namedplace in the country of importation. Seller bears most costs andrisks involved in bringing the goods thereto.

Documentary Letter of Credit A L/C that requires receipt of specified documents before thetransaction can be completed.

Documents Against Acceptance

Instructions given by a shipper to a bank indicating thatdocuments transferring title to goods should be delivered to the buyer (or drawee) only upon the buyer's acceptance of theattached draft

Documents Against Payment Payment for goods without a guaranteed form of payment in which the documents transferring title to the goods are not givento the buyer until he/she has signed a sight draft.

Ex Works named place (EXW) An INCOTERM indicating Seller has fulfilled its obligation to

deliver when it has made the goods available at its premises (i.e. works, factory, warehouse, etc.) to Buyer. Seller is notresponsible for loading the goods on the provided transport vehicle.

Free Alongside Ship named port of shipment (FAS) An INCOTERM indicating Seller has fulfilled its obligation todeliver when the goods have been placed alongside the vessel onthe dock (quay) at the named port of shipment. Buyer bears all

costs and risks of loss / damage to the goods from that momenton.

Free Carrier (FCA) An INCOTERM meaning the cost, risk and responsibility shiftfrom Seller to Buyer when goods are turned over to a carrier at aspecified place. If place is the Seller's site, Buyer must pay thepre-carriage to the main carrier's terminal.



Free on board (FOB) An INCOTERM meaning Seller is required to transport the goodsto the named port of export and arrange for export clearance.Risk, cost, and responsibility shift to Buyer when the goods pass

over the carrying ship's rail.

Free on Board named place (FOB) An INCOTERM indicating title and responsibility pass to thecustomer at the named location.

INCOTERMS

A set of international standards for the uniform interpretation ofcommon international trade contract clauses.

Irrevocable Letter of Credit An L/C which cannot be amended or canceled without prior

mutual consent of all parties to the credit.

Letter Of Credit (L/C) A commitment, usually by a bank on behalf of a client, to pay a beneficiary a stated amount of money under specified conditionsfor merchandise or services rendered.

Market-Point Pricing

Competitive or reactive pricing

Open Account Credit extended that is not supported by a note, mortgage, orother formal written evidence of indebtedness.

Penetration Pricing

Entering a market with a relatively low price as a means ofgaining market share.

Prepaid (PPD) Charges

This transportation term means that all charges, includingfreight, are to be paid by the Shipper. Or, it may mean that onlythose charges designated as 'prepaid' are to be paid by theShipper with other charges to be collected from the Receiver.

Revocable Letter of Credit An L/C that can be amended or cancelled at any time by eitherthe originator or the payee.



Sight draft A draft that is payable on demand.

Skimming Pricing

The practice of setting a relatively high price for a product, oftenfor the purpose of increasing margins in markets that aresomewhat price inelastic.

Society for Worldwide Interbank Financial Transactions(SWIFT) Network through which international banks conduct theirfinancial transactions.

Standby Letter of Credit

A L/C which a bank issues on behalf of its customer to serve as aguarantee to the beneficiary of the L/C that the bank's customer will perform a specified contract with the beneficiary. If thecustomer defaults, the beneficiary may draw funds.

Time draft A financial instrument that is payable within a specified timeperiod.

Trade Acceptance

A draft drawn by Seller of goods upon Buyer who agrees to pay

by signing 'accepted' on the draft.

Transferable Letter of Credit A Letter of Credit authorizing the beneficiary to transfer the rightto receive the proceeds of the letter to another party.

Transfer price

Prices on intracompany sales

Unconfirmed Letter Of Credit

A type of L/C bearing the obligation of the issuing bank only, notof any other ban