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Unit 7 Letter of Credit 7. 1 Questions 1. What’s the definition of an Unit 7 Letter of Credit 7. 1 Questions 1. What’s the definition of an L/C? What is the main difference between payment by L/C and payment by collection? 2. Are you clear about the parties and contents of an L/C?

3. Can you tell the procedure of L/C? 4. Do you know the reasons 3. Can you tell the procedure of L/C? 4. Do you know the reasons for rushing an L/C? 5. What should the seller write in his first letter to urge the establishment of L/C? 6. What should the seller write in his second letter to urge the establishment of L/C if his first letter brings no reply?

7. Since we do business with our buyers, if we need to ask for 7. Since we do business with our buyers, if we need to ask for amendment of the L/C, can the buyer and seller make a discussion without the issuing bank directly? How can we do? 8. Under what condition is an extension of L/C necessary?

importer contract applicant exporter beneficiary 4 10 1 3 5 9 2 issuing bank importer contract applicant exporter beneficiary 4 10 1 3 5 9 2 issuing bank 7 8 advising bank 6

o A letter of credit is the written promise of a bank that acts o A letter of credit is the written promise of a bank that acts at the request and on the instructions of the applicant and undertakes to pay the beneficiary the amount specified in the credit, provided that the terms and conditions of the credit are observed by the beneficiary.

4. Do you know the reasons for rushing an L/C? ∳ To remind, in 4. Do you know the reasons for rushing an L/C? ∳ To remind, in advance, the importer to open L/C in accordance with the time provided in the contract; ∳ To urge the importer to rush establishment of L/C, as he has exceeded the time limit.

5. What should the seller write in his first letter to urge the establishment 5. What should the seller write in his first letter to urge the establishment of L/C? ∳ In the first letter of urging establishment of L/C, the seller should first state the fact that the goods ordered are ready for shipment but the relevant L/C has not yet been received and then express his hope that, upon receipt of this letter, the buyer will open the L/C immediately.

6. What should the seller write in his second letter to urge the establishment 6. What should the seller write in his second letter to urge the establishment of L/C if his first letter brings no reply? ∳ If the first letter brings no reply, the seller should send out a second one to urge the buyer to open the L/C immediately. The second letter, though still restrained, many express disappointment and surprise.

7. Since we do business with our buyers, if we need to ask for 7. Since we do business with our buyers, if we need to ask for amendment of the L/C, can the buyer and seller make a discussion without the issuing bank directly? How can we do? 8. Under what condition is an extension of L/C necessary?

7. 2 useful expressions o o o o Doctrine of strict compliance Instruction Observed 7. 2 useful expressions o o o o Doctrine of strict compliance Instruction Observed Packing loan Deposit for security Integrity Reimbursement Commission charges Financial accommodation Appear on their face to be in conformity with Fraud Debtor—creditor Bona fide holders Draft at maturity o o o o Discrepancy Applicant Issuing bank Advising bank Beneficiary Negotiating bank Nominator Confirming bank entrustment Recourse Documentary credit – clean credit Revocable—irrevocable documentary credit Confirmed –unconfirmed Sight—time usance credit

7. 3 Letters concerning L/C mainly include the following o o o Seller’s urging 7. 3 Letters concerning L/C mainly include the following o o o Seller’s urging establishment of L/C and buyer’s giving reply Seller’s asking for amendment to L/C and buyer’s giving reply, or vice versa Seller’s requesting extension of L/C and buyer’s giving reply, or vice versa

7. 3. 1 Urging establish of L/C Dear Sir We refer to your order 7. 3. 1 Urging establish of L/C Dear Sir We refer to your order for 500 dozen pairs of Viva jeans and our sales confirmation No. 341. We would like to remind you that the delivery date is approaching and we have not yet received the covering letter of credit. We would be grateful if you would expedite establishment of the L/C so that we can ship the order on time. In order to avoid any further delay, please make sure that the L/C instructions are in precise accordance with the terms of the contract. We look forward to receiving your response at an early date. Yours Sincerely.

Dear sirs, with reference to our sales Cntract No 123 covering 2000 dozen of Dear sirs, with reference to our sales Cntract No 123 covering 2000 dozen of thermos flask, we regret to inform you that we have not received your relevant L/C, though you promised to establish the L/C immediately after the signing of the contract. According to the contract stipulation, shipment is to be effected before November 10, 2003. please note that if your LC cannot reach us within one week, we are afraid that delivery will have to be postponed. Please giiive this matter your immediate attention and expedite the covering L/C so that we can effect shipment without any delay. We hope to receive your L/C soon. Yours sincerely, Lucy Lee o

Dear Ms. See, Thank you for your letter of October 15, 2003. We are Dear Ms. See, Thank you for your letter of October 15, 2003. We are very sorry to learn that you have not received the L/C under your Sales Contract No. 123. Mr. Smith has gone to attend the Guangzhou Fair and I, Andrew Tunik, his colleague, have checked this matter up with ABC Bank, Osaka, Japan, the issuing bank, to see whether the covering L/C has been opened. I am very pleased to tell you that the L/C in question has been opened and will be sent to the advising bank, Bank os China, Dalian Branch by teletransmission today, who I believe will advise you of the L/C tomorrow. Upon receipt of our L/C, please do your utmost to get all the goods ready within the time limit, book the shipping space on the vessel “White Cloud” v. 088 and effect delivery in time.

Useful sentences for rushing L/C It would be advisable for you to establish the Useful sentences for rushing L/C It would be advisable for you to establish the covering letter of credit as early as possible so as to enable us to arrange shipment in due time. 2. We are unable to effect shipment according to the price and other terms originally agreed upon owing to the delay of your letter of credit, and therefore the responsibility for any loss arising subsequently will wholly rest with you. 1.

o 3. We wish to draw your attention to the fact that the goods o 3. We wish to draw your attention to the fact that the goods have been ready for shipment for a long time and the covering letter of credit, due to arrive here before march 15 th, 19…, has not been received up to now. Please let us know the reason for the delay. 4. As you have failed to establish the letter of credit in time, we regret being unable to effect shipment within the stipulated time limit.

5. To our disappointment, we have not yet received the required letter of credit 5. To our disappointment, we have not yet received the required letter of credit up to the present. Please give this matter your immediate attention and let us have your reply soon. 6. As the goods against your Order No. 4567 have been ready for quite some time, it is imperative that you take immediate action to have the

Exercises o o o Translation 1. 第 268号合约项下的800辆自行车备妥待运已 久, 但至今我们尚未收到你们的有关信用证, 请速 开来, 以便装运. 2. Exercises o o o Translation 1. 第 268号合约项下的800辆自行车备妥待运已 久, 但至今我们尚未收到你们的有关信用证, 请速 开来, 以便装运. 2. 如你方信用证在月底前到达我处, 我们将尽最 大努力在下月初安排装运你们所订的货. 3. 由于你方没有及时开立有关第 1033号售货确认 书的信用证, 我们不得不撤消这份确认书, 并要你 方负责由此而产生的一切损失. 4. 我们想指出, 我方第 112号售货确认书项下的货 物备妥待运以久, 我们一直在等候你方的信用证, 可是很遗憾, 我们既没有收到该信用证也没有从你 处听到有关这方面的任何消息. 请见信后即告你方 在开里信用证上究竟有何困难.

The 800 bicycles under Contract 268 have been ready for shipment for quite some The 800 bicycles under Contract 268 have been ready for shipment for quite some time, but we have not yet received your covering L/C to date. Please open the LC as soon as possible so that we may effect shipment. 2. If your L/C reaches us by the end of this month, we will exert our utmost efforts to arrange shipment of your ordered goods at the beginning of next month. 1.

As you have failed to establish the L/C promptly covering our sales confirmation NO. As you have failed to establish the L/C promptly covering our sales confirmation NO. 1033, we have to rescind this sales confirmation and hold you responsible for all the losses arising therefrom. 4. We wish to point out that the goods under our S/C No. 112 have been ready for shipment for a long time. We have been waiting for the arrival of your L/C but regretfully no L/C has been received by us nor have we heard anything from you in this respect. Please let us know upon receipt of this letter whether you 3.

7. 3. 2 L/C amendment o Letters concerning L/C amendment and extension should be 7. 3. 2 L/C amendment o Letters concerning L/C amendment and extension should be written with courtesy because a mere amendment to or extension of L/C will need time and money, which is always an annoying thing to the buyer.

 Introduction Why is it essential for the seller to check the L/C carefully Introduction Why is it essential for the seller to check the L/C carefully after receiving the relevant L/C? o Can you describe the usual procedure for the seller to ask for amendment to an L/C? o

What should the beneficiary check (1) Pay close attention to the notation by the What should the beneficiary check (1) Pay close attention to the notation by the advising bank; o Examine whether the names and addre sses are legally correct; o Check whether the L/C stipulations conform to the contract terms and con ditions in the name of the commodity, quantity, quality, packing, unit price, total amount, time of delivery, etc. o

 What should the beneficiary check (2) Examine those terms that are not listed What should the beneficiary check (2) Examine those terms that are not listed in the contract to see if they are acceptable and if they contradict the contract terms; o Check the documents required to see if the beneficiary has difficulties in obtaining some of the documents; o Examine the place of expiry to see whether it is in the exporter’s country; o Check whether the period for document presentation is sufficiently long enough for the seller to get all the documents ready be- fore this period. o

Rules of letters concerning L/C amendment Acknowledgement of the relevant L/C; o Request for Rules of letters concerning L/C amendment Acknowledgement of the relevant L/C; o Request for amendment and stating the reasons; o Other requirements if any; o Expectation of cooperation and an early reply. o

Specimen letter—useful phrases o o o o amend…to read… should be…, not… should be…, Specimen letter—useful phrases o o o o amend…to read… should be…, not… should be…, instead of… should be…to replace… change…to… change…into… delete… insert…before…

Specimen letter (1) Dear Mr. Tunik, Irrevocable documentary credit number: 0088 IA We have Specimen letter (1) Dear Mr. Tunik, Irrevocable documentary credit number: 0088 IA We have received the captioned L/C against our Sales Contract No. 123. After going over the L/C clauses, we have found some discrepancies between your L/C stipulations and the terms and conditions of our Sales Contract. Besides, some terms do not conform to the international trading practices. Therefore, you are requested to amend the L/C accordingly so that we can execute our contract smoothly.

 The drawee of the draft should be “ABC Bank, Osaka, Japan”, not “XYZ The drawee of the draft should be “ABC Bank, Osaka, Japan”, not “XYZ Co. , Osaka, Japan”. Amend the amount both in figures and in words to read: “USD 14557. 80(US Dollars Fourteen Thousand Five Hundred Fifty-Seven and Cents Eighty Only. )” respectively. Delete the clause “insurance Policy in triplicate covering All Risks for 110% of the total invoice value as per China Ocean Marine Cargo Clauses of PICC dated 1/1/1981. ” Change the port of destination from “Kobe” to “Osaka, Japan”.

 The place of expiry should be “in China” instead of “in Japan”. Full The place of expiry should be “in China” instead of “in Japan”. Full set of clean on board ocean bills of lading should be marked “freight Collect” to replace the original statement, i. e. “Freight Prepaid”. Change “Partial shipments prohibited” into “Partial shipments allowed in two equal lots. ” Since the shipment date is approaching, please amend the L/C the soonest possible. Otherwise, we cannot ship the Thermos Flask ordered by you within the time limit. We are looking forward to receiving your amendment advice ASAP.

关于改证的句子 1. Please insert the word “about” before the quantity in your L/C No. 关于改证的句子 1. Please insert the word “about” before the quantity in your L/C No. 123. 2. We have received your L/C No. 524, but we find it contains the following discrepancies; …… We would therefore request you to instruct your bankers to make the necessary amendment.

3. As there is not direct sailing from Shanghai to your port during April/May, 3. As there is not direct sailing from Shanghai to your port during April/May, it is imperative for you to delete the clause “by direct steamer” and insert the wording “Partial shipments and transshipment are allowed”. 4. Please amend L/C No. 283 to read “This L/C will expire on 28 th February, 2005… in China. ”

5.  Thank you for your cooperation in promptly opening L/C. However, the L/C was 5.  Thank you for your cooperation in promptly opening L/C. However, the L/C was presented a wrong printed figure, please instruct your opening bank to amend it as soon as possible, so that we can arrange a earlier vessel for shipment. 6.  It is regrettable to find the following discrepancies in your L/C, please amend it. We appreciate your prompt attention.

7. We have today received L/C No. 123 covering the shipment of. . . 7. We have today received L/C No. 123 covering the shipment of. . . After we have checked the L/C carefully, we request you to make the following amendments: 1… 2… 3…

8. Upon checking, we found the following discrepancies: o 1… o 2… o 3… 8. Upon checking, we found the following discrepancies: o 1… o 2… o 3…

1. 你方 4567号信用证条款中,我们 有发现有下列两点与合同条款不符: (1)……;(2)…… 货以备妥待运,请即电报修改你方信用证。 2. 在我方第 135号合同内明确规定该笔交易的 佣金为 3%。但发现你方第 557号信用正要求 佣金 5%,这显然与条约条款不符。为此,请 1. 你方 4567号信用证条款中,我们 有发现有下列两点与合同条款不符: (1)……;(2)…… 货以备妥待运,请即电报修改你方信用证。 2. 在我方第 135号合同内明确规定该笔交易的 佣金为 3%。但发现你方第 557号信用正要求 佣金 5%,这显然与条约条款不符。为此,请 通知你方银行把信用证修改为佣金 3%,不胜 感激。 o

3. 现通知,你方通过利物浦麦加利银行 开出的有关我方第 187号售货确认书的 信用正第H-15刚刚收到。经审阅其中条 款,我们遗憾地发现某些地方与合同规 定的条款不符,其不符之处如下: (1). 佣金应是 3%,不是 6%。 (2). 货物应于10月11日之前装运,而 不是 3. 现通知,你方通过利物浦麦加利银行 开出的有关我方第 187号售货确认书的 信用正第H-15刚刚收到。经审阅其中条 款,我们遗憾地发现某些地方与合同规 定的条款不符,其不符之处如下: (1). 佣金应是 3%,不是 6%。 (2). 货物应于10月11日之前装运,而 不是 10月30日或 30日之前装运。 (3). 货物按发票价值的110%投保保险, 不是 150%。

1. Among the clauses specified in your L/C No. 4567, we find that the 1. Among the clauses specified in your L/C No. 4567, we find that the following two points do not conform to the contract stipulations: 1… 2… 3… As the goods are now ready for shipment, you are requested to amend the L/C by cable as soon as possible.

 2. The commission allowed for this transaction is 3% as clearly stipulated in 2. The commission allowed for this transaction is 3% as clearly stipulated in our Contract No. 135, but we find that your L/C No. 557 demands a commission of 5%. This is obviously not in line with the contract stipulations. We shall therefore be grateful if you will instruct your bankers to amend the L/C to read

 3. We are pleased to inform you that L/C No. H-15 issued by 3. We are pleased to inform you that L/C No. H-15 issued by the Chartered Bank of Liverpool for our S/C No. 187 has just been received. However, on examining (going through) the clauses contained therein, we regretfully find that certain points are not in conformity with the terms stipulated in the contract. The discrepancies are as follows: o (1) Commission is 3%, not 6 %/ o (2) Shipment is to be made during Oct. /Nov. instead of “on or before

关于展证的句子 o 1. Please extend the shipment date and the validity of your L/C 关于展证的句子 o 1. Please extend the shipment date and the validity of your L/C No. 937 to the end of November and December 15, 19… respectively and arrange that the amendment advice will reach us by Oct. 30, 19….

o o 2. The amendment advice should reach us by November 15, failing which o o 2. The amendment advice should reach us by November 15, failing which you must extend the validity of the L/C to the end of this year. 3. The shipment covered by your Credit No 592 has been ready for quite some time, but the amendment advice has not yet arrived, and now an extension of 15 days is required.

1. 请把你方 4761号信用证的装船期和有效期分 别展至 2005年 11月30日和12月15号,并注意 修改通知书要在 2005年 10月30日前到达我处, 否则我方绝不可能在 11月份装运。 2. 收到你方 789号信用证,谢谢。经核对条 1. 请把你方 4761号信用证的装船期和有效期分 别展至 2005年 11月30日和12月15号,并注意 修改通知书要在 2005年 10月30日前到达我处, 否则我方绝不可能在 11月份装运。 2. 收到你方 789号信用证,谢谢。经核对条 款,我们遗憾地发现你方信用证要求2005年 10月份装运,但我方合约规定 11月份装运。 因此,务请把装运期和议付期分别展至 2005 年 11月30日和12月15日,请即办理展证事宜, 并尽早电复。

 1. Please extend the shipment date and the validity of your L/C No. 1. Please extend the shipment date and the validity of your L/C No. 4761 to November 30 and December 15, 2005, failing which it will be absolutely impossible for us to ship the goods in November. 2. We thank you for your L/C No. 789, but on checking its clauses we find with regret that your L/C calls for shipment in October, 2005, whereas our contract stipulates for November shipment. Therefore, it is imperative for you to extend the shipment date to November 30, and negotiation date to December 10, 2005 respectively.

改证练习答案 Dear Sirs, We are pleased to inform you that L/C No. 94625 issued 改证练习答案 Dear Sirs, We are pleased to inform you that L/C No. 94625 issued by the Chartered Bank of Singapore for our S/C No. 1023 has just been received. However, on examining the clauses contained therein, we regretfully find that certain points are not in conformity with the terms stipulated in the Sales Confirmation. We Therefore request you to make the following amendments: 1. Amend the L/C to read “confirmed and irrevocable L/C”; 2. The amount should be “USD 8700”, not “USD 7800”; 3. Insert “Printed” before “T-shirts”’; 4. Transshipment should be allowed instead of prohibited; 5. L/C should be amended to read “this credit expires on September 21, 1994, ”. As the goods are now ready for shipment, you are requested to amend the L/C by cable as soon as possible. Yours faithfully,

Dear Sirs, We have received the above mentioned L/C against our Contract No. 245 Dear Sirs, We have received the above mentioned L/C against our Contract No. 245 B. after checking the L/C carefully, we have found a number of discrepancies and would request you to make the following amendments: 1. The place of expiry should be China instead of London. 2. The correct name of the applicant is “London Food Imp. Co. Ltd”, not “London Imp. Co. , Ltd. ” 3. Please increase the unit price to GBP 2200 per m/t and the total amount both in figure and in words to “GBP 11000”(Say Sterling Pounds Eleven Thousand Only). 4. Amend the clause “Partial shipments and transshipment are prohibited. ” to read “Partial shipments are allowed. Transshipment is prohibited. ” 5. “your draft at sight for 90% of the invoice value” should be amended to read “your draft at sight for 100% of the invoice value”. 6. The contracted goods is “Frozen Shrimps”, not “Fresh Shrimps”. We hope you will send us your amendment advice without any delay so as to enable us effect shipment in time.

Keys to Ex. III o o 1. Please extend the shipment date of your Keys to Ex. III o o 1. Please extend the shipment date of your L/C to March 5 and validity to March 20, thus enabling us to effect shipment of the goods in question. 2. We shall be glad if you will see to it that amendment is cabled without delay, as our goods have been packed ready for shipment for quite some time. 3. It appears that the amount in your L/C is insufficient, as the correct total CIF value of your order comes to £ 2, 800, instead of £ 2, 600, the difference being £ 200. 4. As we understand it is impossible to ship the goods before the originally agreed delivery date, we have extended the shipment and validity dates of the L/C to October 15 and 30 respectively.

Keys to Ex. IV o o o o 1. We suppose that the above Keys to Ex. IV o o o o 1. We suppose that the above mistakes are clerical and hope you will make the necessary amendments immediately so that we can ship the goods in time. 2. We wish to refer to our letter of June 10, asking you to extend the shipment and validity of L/C SG 9041 to July 5 and July 20 respectively. However, up to now, we have not heard from you. 3. We can't make payment out of the letter of credit, as there are numerous discrepancies in the documents forwarded to the bank. 4. As there is no direct steamer sailing for the port named by your client, please arrange to delete the clause “Transshipment is prohibited” from your L/C. 5. If you find anything in the L/C application form is not in agreement with the contract, please let us know as quickly as possible, so as to avoid unnecessary amendment. 6. As the goods have been ready for shipment for a long time, you are required to rush the amendment as soon as possible so as to enable us to make delivery within the time stipulated. 7. We won’t be able to keep the consignment for you any longer unless your amendment advice reaching us by the end of this week. 8. Regrettably there is no news from you up to the present moment about your L/C, which should have reached us by the end of last month.

Keys to Ex. V o o o Dear Sirs, Re: Letter of Credit No. Keys to Ex. V o o o Dear Sirs, Re: Letter of Credit No. LA 553235 We thank you for your letter of Credit No. LA 553235 covering your order for 50 metric tons of Terpineol. Much to our regret, we find that there is not enough time being allowed in the covering L/C, so that we can hardly deliver the goods within the validity of the L/C. When signing the S/C with your side at the fair, we clearly pointed out that you must allow us 40 days for preparation before shipment and the L/C is to remain valid in China for 15 days after the date of shipment. In order to ensure delivery of the goods, we have to request you to amend the relevant L/C accordingly, specifically, to amend the latest shipment “August 10, 2008” to read “August 30, 2008”. Please rush the necessary amendment with the least possible delay, while at the same time we will be preparing the goods for a prompt shipment. Yours faithfully

Keys to Workshop 1 Dear Sirs, o As is requested in your letter of Keys to Workshop 1 Dear Sirs, o As is requested in your letter of August 25, we have instructed our bank to extend the shipment date and validity of L/C No. NY 123 to September 31 and October 15 respectively, and amend the clause “transshipment and partial shipment prohibited” to read “transshipment and partial shipment permitted”. The amendment of the covering L/C is due to reach you on or before September 1. Thus, we advise you please book the shipping space, and make the shipment before September 31. o If the goods prove satisfactory to our customers, we are substantial orders will follow.

Keys to Workshop 2 o o o Dear Sirs L/C No. PSC-01068679 We are Keys to Workshop 2 o o o Dear Sirs L/C No. PSC-01068679 We are pleased to have received the captioned L/C for the 100 metric tons of CAMPHOR POWDER. As some of its terms are found to be not in conformity with S/C stipulations, we hope you will make the following amendments to enable us to effect shipment within the contracted time limit: 1. The date and place of expiry should read “December 20, 2008, in Suzhou. ” 2. The amount in figures and words should respectively be “USD 265, 000” and “Say US Dollars Two Hundred and Sixty-five Thousand Only” 3. The wording “with 5% more or less allowed” should be inserted for both amount and quantity. 4. The insurance clause is to be deleted. 5. The specification of the goods should be “synthetic grade, moisture 0. 5% max. ” instead of “natural grade, moisture 0. 3% min. ” 6. The Contract number should be JSH 06530. 7. Goods must be packed in sealed iron drums lined with plastic bag containing 50 KGS each, instead of 25 KGS each. We look forward to your early amendments. Yours sincerely