Letters of Credit

It is often stipulated in contracts that the buyer establishes through the medium⁵ of his banker a credit with a bank in the country of the exporter, and this credit is available to the exporter on producing evidence⁶ of having handed over the consignments to dock-compnnies⁷ forwarding agents⁸, railway companies, etc.

This document credit may be unconfirmed (revocable)⁹ or confirmed (irrevocable)¹⁰; in the latter case it cannot be withdrawn before the fixed term has expired.

When letters of credit are to be made out the following correspondence takes place:

— request to open a credit,

— advice of the beneficiary¹¹, viz. the seller of the goods, by the party establishing the letter of credit.

Payments under the conditions stated above arc based on the confidence of the buyer and his assumption¹².that the seller will supply goods in perfect accordance with specifications.

NOTES

Telegraphic remittance (also called telegraphic transfer (T.T.) is the promptest¹ and simplest way of

1. prompt adj	— быстрый
2. to clear debts	— уплачивать долги
3. wire = telegraph л	— телеграф
4. to pay ...to the debit	— выплатить ..., поставив
	сумму в счет; дебетовав
5. through the medium	— через посредство
6. on producing evidence	— по предъявлении доказательств
7. dock-company	— портовая компания, порт
8. forwarding agents	— экспедиторская(экспедирующая) компания
9. unconfirmed = revocable	— отзывный, неподтвержденный
10. confirmed = irrevocable	— безотзывный, подтвержденный
11. beneficiary n	— получатель (денег)
12. assumption n	— зд. предположение, уверенность

EXAMPLES OF DOCUMENTS CONCERNING THE ESTABLISHING OF LETTERS OF CREDIT

1. Bank requesting another bank in a foreign country to open credit in fvor of an exporter. Dear Sir,

At the request and for account of D.Baumgarten, Haifa, please open a confirmed irrevocable credit in favour of Joseph Miles, London, up to the amount of £ 1,400 (fourteenhundred pounds sterling) to be paid to him against delivery to you of the following documents:

Bills of Lading, full set, clean j>n board, made out endorsed to our order, freight prepaid⁹,

Original Customs Invoice, in quintuplicate¹⁰, relating to 1000 electric cookers¹¹ of British origin, as per order No. S+414 dd. 1.6.91 placed by D. Baumgarten, shipped from London to Haifa.

Proportional payments against partial shipments are permitted.

This credit remains valid in London until 30th September 1991 inch

Please advise this credit to the beneficiary without engagement on your part. Kindly reimburse¹² yourselves by a sight draft on our Head Office, G, Gracechurch St., London Б.С. 2, mentioning the number of this credit as well as the reference number of the Bank of England E2B4 34.388 , for your payments under this credit increased by your charges and send all documents to us by airmail. We hereby engage to honour the dispositions in virtue of this credit¹³, provided same have taken place in accordance with its terms.

Yours truly.

The Anglo-Palestine Bank Ltd.

Branch Tel-Aviv

2. Buyer writing to seller about establishing an irrevocable credit. Gentlemen,

We have taken due note that goods against Order Pa 4/285 are ready and shipping instructions are being sent to you from London.

Following on our letter of 28** March we have today established an irrevocable credit for $ 13,740.00 and requested the Bank of the Manhattan Company, New York to advise you of the fact. ^y

The credit is good for shipment on or before July 31*. We assume however, you will lose no time in carrying out our shipping instructions well before expiration of the credit.

Yours faithfully,

Below are the specimen of a revocable (3) and two irrevocable (4, 5) letters of credit

3. Revocable letter of credit.