UCBL PROFILE

documentary credit, abbreviated as DC or D/C, documentary letter of credit, or simply as credit (as in the UCP 500 and UCP 600). Once the beneficiary or a presenting bank acting on its behalf, makes a presentation to the issuing bank or confirming bank, if any, within the expiry date of the LC, comprising documents complying with the terms and conditions of the LC, the applicable UCP and international standard banking practice, the issuing bank or confirming bank, if any, is obliged to honour irrespective of any instructions from the applicant to the contrary. In other words, the obligation to honour (usually payment) is shifted from the applicant to the issuing bank or confirming bank, if any. Non-banks can also issue letters of credit however parties must balance potential risks.

A Letter of Credit may be payable either at sight or at extended payment terms (payment at a future date). A payment at sight means that the payment is due upon the presentation and receipt of documents after shipment of the goods and/or services are provided. On the other hand, if the exporter (seller) allows the importer (buyer) an additional period after presentation of documents to pay the credit at a future date, then the credit is payable at 30, 60 or 90 days after presentation and acceptance of documents 8.2 Contents of the Letter Of Credit Banks normally issued letter of credit (L/C) on forms, which clearly indicate the banks name and extent of the banks obligation under the credit. The contents of the L/C of different Banks may be different .In general L/C contains the following information: i) Name of the buyer: Who is also known as the accounted since it is for his account that the credit has been opened? ii) Name of the seller: Who is also known as the beneficiary of the credit? iii) Moment of the credit: Which should be the value of the merchandise plus any shipping charges intent to be paid under the credit? iv) Trade Terms: Such as F.O.B and CIF v) Tenor of the Draft which is normally dependent upon the requirements of the buyer. vi) Expiration Date: This is specified the latest date documents may be presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over the time of shipment. vii) Documents required: Which will normally include commercial invoice consular or customers invoice, insurance policies as certificates, if the source is to be effected by the beneficiary and original bills of lading. viii) General description of the merchandise: This briefly and in a general manner duly describes the merchandise covered by a letter of credit.

8.3 Classification of L/C: There are many kinds of L/C. Few of them are briefly discussed below: 8.3.1 Irrevocable L/C: Irrevocable credit means the credit cannot be amended or cancelled without the agreement of all parties (the beneficiary, the applicant, the issuing bank and the confirming bank if the letter of credit is confirmed). A credit therefore should clearly indicate whether it is revocable or irrevocable; however, in the absence of such indication, the credit shall be deemed to be irrevocable.

8.3.2 Revocable L/C: A revocable letter of credit may be cancelled or modified after its date of issue, by the issuing bank.