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Letter of Credit
Particulars
Latest Negotiation Date
- The latest negotiation date is the last day
of the period of time allowed by the letter of credit
(L/C) for the presentation of documents and/or
draft(s) to the bank. The latest
negotiation date is not necessarily the L/C expiry
date. In the sample letter
of credit the latest negotiation date can be
March 26, 2001 or 15 days after the
date of shipment, whichever comes first.
In case the L/C does not stipulate the
latest negotiation, it is within 21 days after the
date of issuance of the transport documents, but on or
before the L/C expiry date.
- Expiry Date and Place
- The expiry date and place is the last day
of validity of the credit and the place allowed by the
letter of credit (L/C) for the presentation of
documents and/or draft(s) for payment, acceptance or
negotiation. In the sample
letter of credit
the expiry date is March 26, 2001
and the place for presentation of document is
Export-City, which is the beneficiary's city.
In case the validity of an L/C is stated
in a period of time, for example "this
credit is valid for three months" or "this
credit is available for two months" or "this
credit is good for one month", but does not
specify the date from which the time is to run, its
validity starts from the issuance date of L/C by the
issuing bank. The bank normally discourages stating
the L/C validity in a period of time.
In case the expiry date and/or the latest
negotiation date falls on a day on which the bank is
closed for reasons not including the acts of God,
strikes, riots, civil commotions, lockouts,
insurrections, wars or any other causes beyond the
bank's control, the expiry date and/or the latest
negotiation date is extended to the succeeding first
day on which the bank is opened. Such extension,
however, does not extend the latest date of shipment.
- Draft(s) Drawn On
- The draft(s) drawn on answers the question
"Which bank or who is the drawee (the payer) of the
draft?" The draft is most often drawn on the
confirming bank or the issuing bank. In some cases,
the draft is drawn on the applicant. In the sample
letter of credit
the draft is drawn on the confirming bank, which is
The Moon Bank.
- Draft(s) Drawn At
- The draft(s) drawn at answers the question
"The draft is drawn at what terms?" It can be a
sight draft (i.e., payment on demand or on
presentation) or a
term draft (i.e., payment at a fixed or
determinable future time). In the sample letter of credit
the draft is drawn at sight.
- Draft(s) Drawn Under
- The draft(s) drawn under answers the
question "The draft is drawn under which credit and
the credit is of which bank?" In the sample
letter of credit,
the L/C requires that the draft(s) be marked "Drawn
under documentary credit No. SB-87654 of
The Sun Bank, Sunlight City, Import-Country,
dated January 26, 2001" (please
see the completed sample
draft).
- Latest Shipment
- The latest shipment---latest
date of shipment or
last date for shipment---is
the last day of the period of time allowed by the
letter of credit (L/C) for shipment, dispatch or
taking in charge. In the sample
letter of credit
the latest shipment date is March 19, 2001.
- Port or Point of Origin
and Port or Point of Destination
- The port or point of origin is the port or
place of loading, dispatch or taking in charge. The
port or point of destination is the port or place
of discharge or delivery. Some of the expressions that
may appear in the letter of credit (L/C) indicating
the origin and the destination are:
-
- "shipment from ... to ..."
- "dispatch from ... to ..."
- "carriage from ... to ..."
- "delivery from ... to ..."
- "forward from ... to ..."
- "taken in charge at ... for transportation to
..."
In the sample
letter of credit
the origin is Moonbeam Port, Export-Country
and the destination is Sunny Port,
Import-Country.
In practice, the letter of credit (L/C)
often indicates an incorrect port or point of origin
in the triangle trade. For example in the
triangle trade presentation, the flow chart shows
that the third party ships the goods directly to the
buyer. It is incorrect if the buyer stipulates in the
L/C "shipment from Osaka to New
York" or "shipment from
Shenzhen to New York". Shenzhen is located
inland. Export goods from Shenzhen usually are
dispatched from Hong Kong. In such case, the correct
stipulation would be "shipment
from Hong Kong to New York". To avoid mistake
and save the time and cost of a
letter of credit amendment, it is important to
indicate in the
Sales Confirmation (Pro Forma Invoice) the correct
port or point of origin and port or point of
destination.
- Other L/C Particulars
- Confirmed
- Irrevocable
- Transferable
- Freight Prepaid
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