RAHUL KUMAR TAANK (CS PURSUING ) (672 Points)
05 July 2010
DEAR SIR,
A LETTER OF CREDIT IS A PROMISE TO PAY. BANKS ISSUE LETTERS OF CREDIT, WHAT IS RESPONSIBILITES & RIGHT OF BOTH SIDE BANKERS, WHAT IS REMIDIES FOR BUYER , IF SELLER REFUSES TO DELIVER GOODS?
RAMESH KUMAR VERMA
( CS PURSUING )
(43853 Points)
Replied 07 July 2010
MR. RAHUL,
Letter of credit(L/C or LC) is a document issued by a financial institution which provides an irrevocable payment undertaking to a beneficiary against complying documents as stated in the credit. It is often referred to as a documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit.
Once the beneficiary or a presenting bank acting on its behalf, makes a presentation to the issuing bank or confirming bank, if any, within the expiry date of the LC, comprising documents complying with the terms and conditions of the LC, the applicable UCP and international standard banking practice, the issuing bank or confirming bank, if any, is obliged to honour irrespective of any instructions from the applicant to the contrary. In other words, the obligation to honour (payment) is shifted from the applicant to the issuing bank or confirming bank. Non-banks can also issue letters of credit however parties must balance potential risks.
THE BUYER MUST MAINTAIN THE SUFFICIENT AMOUNT IN THEIR EEFC ACCOUNT .
AND WHEN WILL ANY AMENDMENT, INFORM THE BUYER IMMEDIATE TO BOTH SIDE BANKER AND SELLER.
AS PER EXPORT SALES CONTRACT BUYER AND SALER WITH CONVEY WITH CONTRACT ACT, 1872 (IN INDIA) .
FOR MORE INFORMATION IN THIS REGARD YOU CAN LOG ON TO:-
https://www.law.cornell.edu/ucc/2/article2.htm#s2-606
REGARDS,
RAMESH VERMA
CAclubindia
