Term
|
Definition
| person at whose request or on whose account a letter of credit is issued |
|
|
Term
|
Definition
| the person under the letter of credit terms who is entitled to have the letter honored upon presentation |
|
|
Term
|
Definition
| bank or person that issues a letter of credit |
|
|
Term
|
Definition
| a person who the issuer designates or authorized to pay, negotiate, or give value under a letter of credit |
|
|
Term
|
Definition
| information that is inscribed on a tangible, electronic, or other medium that is retrievable in perceivable form |
|
|
Term
| 8 step letter of credit process |
|
Definition
| A. |
Buyer and seller make a sales contract, included in the terms are provisions for a letter of credit to be used to finance the sale. |
| B. |
Buyer makes an application to its bank for a letter of credit. |
| C. |
The buyer's bank (issuer) forwards the letter of credit (record) to a correspondent bank (nominated person) in the seller's country. |
| D. |
The correspondent bank sends the letter of credit to the seller (beneficiary). |
| E. |
The seller, upon receipt, prepares the goods for shipment and prepares the documents required under the letter of credit delivering the documents to the correspondent bank. |
| F. |
The correspondent bank, if it deems the documents are in order, sends the documents to the issuer (buyer's bank) and pays the seller according to the terms of the letter of credit. |
| G. |
The issuing bank, if the documents are in order, charges the buyer's account, forwards the documents to the buyer (or a custom broker), and reimburses the correspondent bank. |
| H. |
The buyer (or custom broker) takes the documents to the carrier and picks up or has the goods delivered to the buyer. |
|
|
|
Term
| 5 general rules for letters of credit |
|
Definition
- letter can be issued in any form as long as it has a signature
- consideration not required for the issuance
- can be revocable (if so provided in the letter) if domestic, not if international
- expire 1 year after its stated date of issuance or date of issue (unless stated differently). If it is stated "perpetual": 5 years.
- one year statute of limitations
|
|
|
Term
| 5 duties, rights, and obligations with the letter of credit |
|
Definition
- issuer must honor (unless there is fraud or forgery involved) a presentation, or give notice of a defect in presentation within 7 business days
- for wrongful dishoner, issuer is liable for the amount that is subject to dishonor, or damages caused by it
- if presentation is honored, beneficiary warrants to the issuer there is no fraud or forgery, and to the applicant that there is no violation of any agrrement between the 2 parties
- can't be transferred unless so stated in letter
- independent of the underlying contract between the seller and buyer
|
|
|
Term
|
Definition
- document evidencing the receipt of goods by a carrier for shipment
- must be in writing and adequately describe goods shipped
- through bill=more than one carrier
- destination bill= one to be issued at destination, place of delivery
|
|
|
Term
|
Definition
- reciept issued by a person engaged in the business of storing goods
- must have location of goods, date of issue and number, rates, description, any liens, signature of warehouseman, and a statement if warehouseman is owner
|
|
|
Term
|
Definition
| order by the bailor or third person for the bailee to deliver goods |
|
|
Term
|
Definition
| person who delivers goods to a carrier named in a bill of lading |
|
|
Term
|
Definition
person named in a bill of lading whom or whose order the goods are to be delivered
|
|
|
Term
| 2 qualifications for negotiable document |
|
Definition
a document is negotiable if ...
- by its terms, the goods are to be delivered to the bearer or order of the consignee or personal to whom delivery is to be made
- it is an international document and it runs to a names person or assigns
|
|
|
Term
| negotiable bill of lading |
|
Definition
|
|
Term
| nonnegotiable bill of lading |
|
Definition
|
|
Term
|
Definition
- both warehouse company and carrier have a right to place possessory liens on goods for any storage or carrier charges and costs not paid by the bailor
- enforcement is by private or public sale but must be commercially reasonable with proper notics
|
|
|
Term
| 3 rules for negotiable documents |
|
Definition
- holder can acquire better rights than the transferor-assignor
- negotiation depends on whether the document is bearer (delivery only) or whether its an order document (delivery plus an indorsement)
- duly negotiated to holder if the holder takes document in good faith, without notice of defense or claim of a person to the doc or goods, for value, and in the ordinary course of business
|
|
|
Term
|
Definition
- acquires title to the goods and a right to have delivery or possession of these goods according to the terms of the document contract
- shelter principal applies
|
|
|
Term
|
Definition
| to the holder that the negotiable doc is genuine, that the indorser has no knowledge of claims or facts that would impair the goods or docs value, and the trasnfer is rightful. there is, however, NO guaranty of the bailee's performance |
|
|
Term
|
Definition
- forgery of the document or any indorsement defeats rights of any holder to either the document or the goods
- documents of stolen goods do not pass title
- buyers of fungible goods in the ordinary course of business have priority over doc holder
|
|
|
Term
| if negotiable doc transferred through fraud... |
|
Definition
- party committing fraud doesn't have power to negotiate it
- subsequent holders can't collect
|
|
|
