第三章 信用证.ppt

Chapter 3 Letter of credit
Section 1 Definition of documentary credits

A documentary credit is the written promise of a bank, undertaken on behalf of a buyer to pay the seller the amount specified in the credit provided that the plies with
the terms and conditions set forth in the credit.
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I. The features of documentary credit
(1) Documentary credit is a banking business, . issuing bank acts as the credit medium with the participation of advising bank and negotiating bank.
(2) Documentary credit only cares for the documents instead of caring for the actual shipment of goods, . issuing bank effects the payment if there is an apparent conformity between the documents and the terms and conditions of credit.
(3)Although the issuance of a L/C is based on the terms and conditions of a sales contract, once it has been issued, it will be independent on the sales contract.
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II. Roles of banks under L/C
Banks act as the intermediary between the buyer and the seller. So, both sides take the banks as protectors of their interests.
(1) Banks assume no responsibilities regarding the quality of goods shipped. They are only concerned that documents presented appear on their face to be consistent with the terms and conditions of the documentary credit.
(2) Any disputes as to quality or quantity of goods delivered must be settled between the buyer and the seller.
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III. Limitations of documentary credits
(1) They do not ensure that the goods actually shipped are as ordered, nor do they insulate buyers and sellers from other disagreements plaints arising from their relationship.
(2) L/C is not fool proof. Opportunities for fraud do exist. Many opportunities for fraud center on the facts that banks deal with documents rather than goods, and therefore the seller has opportunity for presenting fraudulent documents
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