1. Applicant
The person who applies to the bank for issuance of a letter of credit, also known as the issuer in a letter of credit;
Obligations:
①Issue a certificate according to the contract
②Pay a proportional deposit to the bank
③Pay the redemption order in a timely manner
Rights:
①Inspection, redemption order
②Inspection, return (all based on letter of credit)
Note:
①The issuance application has two parts, namely the application for issuance by the issuing bank and the statement and guarantee by the issuing bank.
②Declaration that the ownership of the goods before payment of the redemption note belongs to the bank.
③The issuing bank and its agent bank are only responsible for the surface of the document. Responsibility for compliance
④The issuing bank is not responsible for errors in document delivery
⑤Not responsible for “force majeure”
⑥Guarantee payment of various fees
⑦The issuing bank can add deposits at any time if the certificate is available
⑧The issuing bank has the right to decide on cargo insurance and increase the level of insurance The fee is borne by the applicant;
2. Beneficiary
Refers to the person named on the letter of credit who has the right to use the letter of credit, that is, the exporter or actual supplier;
Obligations:
①After receiving the letter of credit, you should check it with the contract in a timely manner. If it does not meet the requirements, you should ask the issuing bank to modify or refuse to accept it as soon as possible or ask the applicant to instruct the issuing bank to modify the letter of credit.
②If it is accepted, ship the goods and notify the consignee. , prepare all the documents and present them to the negotiating bank for negotiation within the specified time.
③Be responsible for the accuracy of the documents. If they are inconsistent, you should follow the issuing bank’s order correction instructions and still present the documents within the time limit specified in the letter of credit;
3.Issuing bank
Refers to the bank that accepts the entrustment of the applicant to issue a letter of credit and assumes the responsibility of guaranteeing payment;
Obligations:
①Issue the certificate correctly and timely
②Be responsible for the first payment
Rights:
①Collect handling fees and deposits
②Reject non-conforming documents from the beneficiary or negotiating bank
③After payment, if the issuance applicant is unable to pay the redemption order, the documents and goods can be processed;
④The shortage of goods can be claimed from the certificate issuance applicant balance;
4. Advising bank
Refers to being entrusted by the issuing bank. The bank that transfers the letter of credit to the exporter only certifies the authenticity of the letter of credit and does not assume other obligations. It is the bank where the export is located;
Obligation: need to prove the authenticity of the letter of credit
Rights: The forwarding bank is only responsible for transferring
5. Negotiating bank
Refers to a bank that is willing to buy the documentary draft handed over by the beneficiary, and based on the payment guarantee of the letter of credit issuing bank and the beneficiary’s request, advances or discounts the documentary draft delivered by the beneficiary in accordance with the provisions of the letter of credit, and provides the letter of credit with The bank from which the prescribed paying bank claims (also known as the purchasing bank, billing bank and discount bank; usually the advising bank; there are limited negotiation and free negotiation)
Obligations:
①Strictly review documents
② Advance or discount documentary draft
③ Endorse letter of credit
Rights:
①Negotiable or non-negotiable
②(freight) documents can be processed after negotiation
③After negotiation, the issuing bank goes bankrupt or refuses to pay on an excuse to recover the advance payment from the beneficiary
6. Paying bank
Refers to the bank designated for payment on the letter of credit. In most cases, the paying bank is the issuing bank;
The bank that pays the beneficiary for documents that comply with the letter of credit (minding the issuing bank or another bank entrusted by it)
Rights:
①The right to pay or not to pay
②Once paid, there is no right to recourse to the beneficiary or holder of the bill;
7. A confirming bank
A bank entrusted by the issuing bank to guarantee the letter of credit in its own name;
Obligations:
①Add “guaranteed payment”
②Irrevocable firm commitment
③Independently responsible for the letter of credit and pay against the voucher
④After payment, you can only claim from the issuing bank
⑤If the issuing bank refuses to pay or goes bankrupt, it has no right to claim from the beneficiary Recourse with the negotiating bank
8.Acceptance
Refers to the bank that accepts the draft submitted by the beneficiary and is also the paying bank
9. Reimbursing
Refers to the bank (also known as the clearing bank) that is entrusted by the issuing bank in the letter of credit to repay advances to the negotiating bank or paying bank on behalf of the issuing bank.
Rights:
①Only pay without reviewing documents
②Just pay without refund
③The issuing bank will reimburse if not reimbursed
Post time: Oct-07-2023
