Chapter 7 bank collections, trade finance, letter of credit
Confirmed letter of credit
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Evergreen clause
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Endorsement and delivery
Needed to negotiate and Order instrument. Endorsement means by signature and delivery of the instrument to the holder must take place
Back-to-back letter of credit
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Trade Finance
Assist the buyer in financing its purchase but also provide immediate cash to the seller for the cell and is profitable for the lending Institution. A wide range of financing packages for international trade commonly called this
Payee
Person receiving the money
Uniform customs and practice for documentary credits
. A document that International Bankers know well it is a set of standardized rules for issuing and handling letters of credit that the international Chamber of Commerce drafts and publishes with the assistance of the international banking community
Letter of credit
. An obligation of a bank usually irrevocable issued on behalf of one of its customers and promising to pay a sum of money to a beneficiary upon the happening of a certain event or events
Red clause
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Revolving letter of credit
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Standby letter of credit
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Transferable credits
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Time draft
A draft due at a future date or after a specified period
Bankers acceptance
A negotiable instrument and short-term financing device in wide use to finance International as well as domestic sales. Is a Time draft drawn on and accepted by a Commercial Bank
Fraud in the transaction
Fraudulent documents in which the bank does not have to follow the independence principle and can refuse payment
Drawer
Orders the drawer to pay the amount of the check to the payee
Sight draft
Payable on sight
Drawee
Usually a bank. Is either the buyer or its Bank depending on the arrangement made for payment
Nominated Bank
Usually in the sellers country has been appointed by the issuing Bank to honor the documents. Is often the advising bank that originally transmitted the documents to the seller
Documentary collection
When a draft is sent "for collection" it is known as this. The banks act as agents for the seller for collection purposes
Independence principle
A general rule of law stating that the letter of credit is independent of the sales contract between buyer and seller
Holder in due course
Is a holder in possession of a negotiable instrument such as a draft or acceptance
Negotiable instrument
Is a signed writing containing an unconditional promise or order to pay a fixed sum of money to order or to barrier on demand or at a definite time
Bill of Exchange
Is a specialized type of international draft commonly used to expedite foreign money payments in many types of international transactions
Discrepancy
Is any difference no matter how minor between the terms of the required document and the terms required by the letter of credit
Complying presentation
Is one and which the seller delivers all of the required documents, 2) within the time allowed for presentation and prior to the expiration date of the credit 3) containing no discrepancies 4) which complies with all other terms of the letter of credit the provisions of the UCP and standard banking practices
Draft
Is the signed order of the drawer, given to a dog who is in possession of money to which the drawer is entitled, to pay a sum of money to a third party, the payee, on demand or at a definite time.
Negotiation
Is the transfer of an instrument from one party to another so that the transferee takes legal rights in the instrument
Documentary draft
Is used to expedite payment in a documentary sale. Acts as a substitute for money and they act as a financing or credit device
Account party
The buyer
Issuer or issuing Bank
The buyer's Bank
Rule of strict compliance
The prevailing standard established by the courts for examining documents
Documentary letter of credit
The requirement that the bank will pay the seller only on the presentation of documents
Beneficiary
The seller
Acceptance
The time Drive is sent to the buyer for this it is done by stamping the date and the word acceptance across the face of the draft together with the name and signature of the drawing because nobody is obligated on the draft and less it's signature appears on it