p570) . A letter of credit instrument is generally issued by a bank against two types of bills, they are demand bills and usance bills (Massood, A. 2008).To decrease the credit risk to sellers in both domestic as well as foreign trade practice is the most important purpose of letter of credit.. When a bank issues a letter of credit in favor of a customer, it surrogates its creditworthiness for that customer (Borcky. R. 1999).
There are two types of letter of credit; they are standby letter of credit and documentary letter of credit. Documentary letter of credits can again be categorized into revocable and irrevocable. The revocable letter of credit is particularly rare in usage. Irrevocable letter of credit can be confirmed or unconfirmed letter of credit. Every type of letter of credits has its advantages as well as its disadvantages for the buyers and sellers. The charges of each type of letter of credit may vary according to its characteristics. The more the bank assures payment, higher will be the charges of it (Borcky. R. 1999).
Without an agreement between the concerned parties, an irrevocable letter of credit cannot be cancelled before a particular date. A revocable letter of credit can be changed anytime without previous discussions by the bank which issues it. A confirmed letter of credit includes backing by the issuing bank and its correspondents promising payments of all drafts. At the same time an unconfirmed letter of credit will not have any guarantee that the bank will make payments on drafts in case of non payment from the buyer. A stand by letter of credit is a conditional obligation by the issuing bank that it will make payment to the chosen beneficiary if the banks client fails to execute as per the terms of the contract (Letter of credit. 2009).
Letters of credit are more or less separate transactions. They are totally different from bank guarantees. The ...
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(INTERNATIONAL TRADE LAW Essay Example | Topics and Well Written Essays - 2000 Words)
“INTERNATIONAL TRADE LAW Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/miscellaneous/385012-international-trade-law.
The risk of loss rules determines whether the seller may still recover for the price of the goods or whether the buyer must pay for the goods and take delivery, despite the fact that the goods are totally destroyed.
Due to these restrictions, there had been the emergence of countertrade and barter trade in the guise of international trade. According to Schmitthof 1 , under the barter system, there is the flow of trade concurrently under spot transaction where there is no association of foreign exchange between two parties or two nations.
Many countries exchange goods and services irrelevant of the distance, monetary form, local laws, and even international laws. In fact, many individuals now conduct their own international exchanges without going through necessary legal procedures that used to restrict inter-trade between countries.
Due to the ever increasing complexity of the global economy, as well as the need for checks and balances to ensure that international business and trade are conducted in an ethical and beneficial manner, international organizations have rose to prominence which were created in an effort to serve as arbiters in commerce and trade disputes that cross the boundaries of nations, oceans and continents.
Both laws also define the liabilities, duties and rights of the three parties in maritime trade i.e. shipper, the common carrier and the consignee. Both set up international rules for the carriage of goods by sea for the purpose of regulating maritime activities and resolving maritime disputes between the aforesaid parties.
Headquartered in Geneva, Switzerland, the primary objective of the WTO is to help trade flow smoothly, freely, fairly and predictably. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in
The results of these negotiations and talks were knitted together in a final document containing 55o pages and signed by the ministers in 1994. 1
This part of the dissertation will also discuss the spirit and intent of the GATS which is essentially designed to create a
The General Agreement on Tariffs and Trade was created by the US and its allies after the Second World War. Its creation was an answer to the disruptions of trade that happened during the Great Depression and during World War II. The GATT was signed in 1948 and was considered as an after war opening of trade liberation in the World.
ed to be US $ 1 trillion per annum 1 and the letter of credit is described as “the life blood of international commerce”2 The International trade transactions are reported to be in the region of $ US 7 trillion per year and the cost of documentation for the transaction