Chapter 7 bank collections, trade finance, letter of credit

Confirmed letter of credit

.

Evergreen clause

...

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

...

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

...

Revolving letter of credit

...

Standby letter of credit

...

Transferable credits

...

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