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    Unit 4 - Hà Đ Nguyên Phương - 2014510072

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    Phương Hà
    The document is a student's homework assignment on letters of credit. It includes: 1. A vocabulary list defining key terms related to letters of credit such as invoice, bill of exchange, bill of lading, and letter of credit. 2. A 10-step reading passage explaining the process of using a letter of credit in an international trade transaction between a buyer, seller, issuing bank, and advising bank. 3. A brief section with additional information on types of letters of credit such as revocable, red clause, transferable, and irrevocable letters of credit.

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    Unit 4 - Hà Đ Nguyên Phương - 2014510072

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    Phương Hà
    15 views2 pages
    The document is a student's homework assignment on letters of credit. It includes: 1. A vocabulary list defining key terms related to letters of credit such as invoice, bill of exchange, bill of lading, and letter of credit. 2. A 10-step reading passage explaining the process of using a letter of credit in an international trade transaction between a buyer, seller, issuing bank, and advising bank. 3. A brief section with additional information on types of letters of credit such as revocable, red clause, transferable, and irrevocable letters of credit.

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    Unit 4 - Hà Đỗ Nguyên Phương - 2014510072

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    The document is a student's homework assignment on letters of credit. It includes: 1. A vocabulary list defining key terms related to letters of credit such as invoice, bill of exchange, bill of lading, and letter of credit. 2. A 10-step reading passage explaining the process of using a letter of credit in an international trade transaction between a buyer, seller, issuing bank, and advising bank. 3. A brief section with additional information on types of letters of credit such as revocable, red clause, transferable, and irrevocable letters of credit.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    15 views2 pages

    Unit 4 - Hà Đ Nguyên Phương - 2014510072

    Uploaded by

    Phương Hà
    The document is a student's homework assignment on letters of credit. It includes: 1. A vocabulary list defining key terms related to letters of credit such as invoice, bill of exchange, bill of lading, and letter of credit. 2. A 10-step reading passage explaining the process of using a letter of credit in an international trade transaction between a buyer, seller, issuing bank, and advising bank. 3. A brief section with additional information on types of letters of credit such as revocable, red clause, transferable, and irrevocable letters of credit.

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    Họ và tên: Hà Đỗ Nguyên Phương

    MSV: 2014510072

    Bài tập Unit 4


    VOCABULARY
    1. Invoice: Lists of goods sold as a request for payment - b
    2. Clean collection: Payment by bill of exchange to which documents are not
    attached. - f
    3. Documentary collection: Payment by bill of exchange to which commercial
    documents (and sometimes a document of title) are attached. - j
    4. Bill of exchange: A signed document that orders a person or organization to pay a
    fixed sum of money on demand or on a specified date. - g
    5. Bill of lading: Document that shows details of goods being transported; it entitles
    the receiver to collect the goods on arrival. - a
    6. Document of title: Document allowing someone to claim ownership of goods. - e
    7. Issuing bank: Bank that issues a letter of credit (i.e. the importer’s bank). - c
    8. Collecting bank: Bank that receives payment of bills, etc. for their customer’s
    account (i.e. the exporter’s bank). - d
    9. Confirming bank: Bank that confirms they will pay the exporter on evidence of
    shipment of goods. - h
    10. Letter of credit: Method of financing overseas trade where payment is made by a
    bank in return for delivery of commercial documents, provided that the terms and
    conditions of the contract are met. - i

    READING
    1. The applicant (the buyer) completes a contract with the seller.
    2. The buyer fills in a letter of credit application form and sends it to his or her bank
    for approval.
    3. The issuing bank (the buyer’s bank) approves the application and sends the letter of
    credit details to the seller’s bank (the advising bank).
    4. The advising bank authenticates the letter of credit and sends the beneficiary (the
    seller) the details. The seller examines the details of the letter of credit to make sure
    that he or she can meet all the conditions. If necessary, he or she contacts the buyer
    and asks for amendments to be made.
    5. When the seller (beneficiary) is satisfied with the conditions of the letter of credit,
    he or she ships the goods.
    6. The seller presents the documents to his or her bankers (the advising bank). The
    advising bank examines these documents against the details of the letter of credit and
    the International Chamber of Commerce rules.
    7. If the documents are in order, the advising bank sends them to the issuing bank for
    payment or acceptance. If the details are not correct, the advising bank tells the seller
    and waits for corrected documents or further instructions.
    8. The issuing bank (the buyer’s bank) examines the documents from the advising
    bank. If they are in order, the bank releases the documents to the buyer, pays the
    money promised or agrees to pay it in the future, and advises the buyer about the
    payment. (If the details are not correct, the issuing bank contacts the buyer for
    authorization to pay or accept the documents.) The buyer collects the goods.
    9. The issuing bank advises the advising (or confirming) bank that the payment has
    been made.
    10. The advising/confirming bank pays the seller and notifies him or her that the
    payments have been made.

    EXTENSION ACTIVITIES
    1. Revocable LC: allows me to amend or cancel without prior notice to the sellers.
    As the revocable letter of credit can be amended, canceled, or revoked at any
    time and it cannot be confirmed.
    2. Red Clause LC: These letters are commonly used by beneficiaries who act as
    purchasing agents for buyers in another country.
    3. Red Clause LC: allows for the seller to obtain pre-shipment finance, although
    available credit is usually only part of the estimated value.
    4. Transferable LC: allows the first beneficiary to transfer some or all of the credit
    to another party, which creates a secondary beneficiary.
    5. Irrevocable LC: The terms and conditions set forth in an irrevocable letter of credit
    are fixed, and can only be changed with the express agreement of all parties
    involved. These letters help eliminate concerns that unknown buyers won't pay for
    goods they receive or that unknown sellers won't ship goods that have been paid
    for.

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