Documentary Credit Transaction Case Study Example | Topics and Well Written Essays - 750 words

Documentary Credit Transaction - Case Study ExampleAs there is a risk of non defrayal by the importer, sellers can enter into an agreement with the importers buzzword through a letter of credit ( lc).When there is a entryary credit clause in the agreement mingled with the buyer and the seller, a letter of credit is issued by the buyer and the bank makes the payment to the seller.An lc is issued by the customers bank naming the seller as the beneficiary, and as soon as the conditions mentioned in the lc are met by the seller, the payment is made by the bank. A bank in the country of the buyer issues the LC and is referred to as the Issuing Bank. A bank that advises the LC to the Seller is called the Advising Bank and is generally in the country of the Seller.While lcs are a safe, sprightly and convenient method of payment for exporters, there strength be a few pitfalls that the seller might have to consider before signing the contract.The risk shifts from the actual buyer to th e bank.Since presentation of documents to the bank deep down the stripulated time frame is the only criteria for payment, the buyer molds the risk of not getting the goods in good condition, spot the payment would already have been made through the issuing bank. A seller might run the risk of not being able to present the LC before the stipulated date. There could be delays in sales talk and the LC migth expire before the issuing bank gets a confirmation from the buyer about the proper saving of goods.A signature from the buyers side migth also be required to honour the LC, but it might not be possible to obtain it before the expiry of the LC.The document itself might have some discrepencies which could render the document invalid, thus putting the exporter to risk of non payment for his goods.References1. GERTRUDE NIMAKO BOATENG, ONUG, Documentary Credit Transactions A Case Of stunt man Standards, accessed on 01-03-09.http//www.unspecial.org/UNS671/t41.html2.EPASS Internatio nal, Documentary Credit Transactions , accessed on 01-03-09.http//www.epassinternational.com/topics4.html3. CreditGuru.com , Letter of Credit, accessed on 01-03-09http//www.creditguru.com/guestarticleLC.htmMajor Journals - Journal of homo championship - Journal of International Economic Law - Journal of Business Law 4.Websites of Interest yell of Organization Web Site Address International Organizations United Nations commitment on International Trade Law (UNCITRAL) http//www.uncitral.org/ World Trade Organization (WTO) http//www.wto.org Intl Trade Center (ITC) (UNCTAD/WTO) http//www.intracen.org Asia-Pacific Economic Cooperation http//www.apecsec.org.sg Commission for Environmental Cooperation (CEC) http//www.cec.org Commission for Labor Cooperation (CLC) http//www.naalc.org Intl Court of Justice (ICJ) http//www.law.cornell.edu/icj/ Intl Monetary Fund (IMF) http//www.imf.org/ MERCOSUR http//www.americasnet.com/mauritz/mercosur/ Org. for Econ. Cooperation and Dev. (OECD)