Irrevocable Documentary Credit

-
An irrevocable documentary credit constitutes a definite legal undertaking of the issuing bank. It cannot be amended or cancelled without the agreement of the issuing bank, the confirming bank (if applicable) and the beneficiary .

Thus, the beneficiary can expect payment from the issuing bank (or nominated bank) provided the stipulated documents are presented and the terms and conditions of the credit are duly complied with.

An irrevocable credit only carries the legal undertaking of issuing bank to remit. The bank which advises the credit does not undertake to pay. This kind of credit is known as an (unconfirmed) irrevocable credit.

If the beneficiary wishes the advising bank to additionally guarantee payment, he should arrange for the irrevocable credit to be confirmed by the advising bank (or another suitable bank). This credit is then known as a confirmed and irrevocable documentary credit.

Confirmed and Irrevocable Documentary Credit

If an irrevocable credit is confirmed by the advising bank (or any other suitable bank), the credit is known as confirmed and irrevocable documentary credit.

Under this credit, the advising bank which confirms the credit also guarantees the payment in addition to the legal undertaking of the issuing bank. The confirming (advising) bank thus assumes the obligations of the issuing bank with respect to paying the beneficiary.

Accordingly, the beneficiary now has the written legal undertakings of both the issuing bank and the confirming (advising) bank, provided, of course, he presents the stipulated documents and strictly complies with the terms and conditions of the documentary credit.

Popular posts from this blog

Value-Added Role of Logistics

-
Image
Form Utility . It refers to the value added to goods through a manufacturing, production or assembling process. For example, form utility results when raw materials are combined in some predetermined manner to make a finished product. This is the case, for instance, when a bottling company adds together syrup, water and carbonation to make a soft drink. The simple process of adding the raw materials together to produce the soft drink represents a change in product form that adds value to the product. In today's economic environment, certain logistics activities can also provide form utility. For example, breaking bulk and product mixing, which typically take place at distribution centres, change a product's form by changing its shipment size and packaging characteristics. Thus, unpacking a pallet of breakfast cereal into individual customer size boxes form utility to the product. However, the two principal methods in which logistics adds value are in place and time utility
Read more

Various Basic Shipping Charges on Landside and Waterside

-
Landside Stevedoring - cargo handling charges for loading / discharging cargo on / from conventional breakbulk vessels. LCL Service Charge - charge for stuffing and unstuffing LCL (Less than Container Load) cargo into or from a container at the freight station. Equipment Transfer Charge (ETC) - charge for lifting an empty or loaded container onto / from the trailer. Also called Lift-on / Lift-off (LOLO) charge. This charge is applicable on FCL (Full Container Load) containers only. Terminal Handling Charge (THC) - charge for handling (receiving and delivering) FCL containers at the container yard (CY). Waterside Bunker Adjustment Factor (BAF) - surcharge for offsetting changes in fuel prices. Congestion Surcharge - surcharge levied on cargo that are discharge at a port where ships are experiencing delays in turnaround time. Currency Adjustment Factor (CAF) - surcharge for offsetting fluctuations in currency exchange rates of various currencies against the US Dollar. In Asia and Japan t
Read more

Multimodalism - Definition and Concept

-
Image
A global scenario is developing whereby: a) production, manufacturing, distribution and consumption is becoming increasingly sophisticated in order to ensure products are available in the global market place at the correct time, for the correct price and in good condition. b) transport services are changing in nature to meet the demands of buyers and sellers involved in the global production and consumption cycle. c) transportation services demanded by buyers and sellers increasingly involve collection of goods at a place in one country for delivery to a place in another country within specified time frames and with contractual agreement clearly setting out areas of responsibilities and liability. d) results of containerization. e) new technologies in transport (including communication systems). The name commonly applied to this all embracing transport service is Multimodal Transport. What is Multimodal Transport? The United Nations Convention on International Multimodal Transport of G
Read more