Terms used in shipping such as letter of credit (revocable),letter of credit (negotiable),letter of indemnity

 

Terms used in shipping such as letter of credit (revocable),letter of credit (negotiable),letter of indemnity etc.

 

 

This post explains about terms used in shipping such as Letter of Credit,Less than Truck Load,Less Developed Country ,letter of credit (revocable),letter of credit (negotiable),letter of indemnity etc. These terms used in international business are arranged in alphabetical order and you may add more information about terms used in export business at the end of this article, if you wish.

 

Terms used in shipping

 

Less Developed Country - An LDC is a country with low per capita gross national product. Terms such as third world, poor, developing nations, and underdeveloped have also been used to describe less developed countries.

 

Less Than Container Load (LCL):The quantity of freight which is less than that required for the application of a full container load rate.

 

Less than Truck Load (LTL) - It is a shipment that does not completely fill the truck or it weighs less than the weight required for the application of the truck load freight rate.

 

Terms used in shipping such as letter of credit (revocable),letter of credit (negotiable),letter of indemnity etcLess then Container Load (LCL) The term opposite to full container load, referring to small goods which can not fill a container. This kind of goods are usually drawn from various locations and concentrated in container transport station or inland station. The carrier puts goods from different consigners into one container, and consign them respectively in the transport stations or inland stations of the destinations. In this case, the carrier is responsible for loading and uncovering, the cost of which is charged from the consigner and consignee. The duty of the carrier is similar to smallwares transportation.

 

Lesser Developed Countries - The classification LLDC (sometimes also known as "Least" Developed Countries) was developed by the United Nations to give some guidance to donor agencies and countries about an equitable allocation of foreign assistance. The criteria for designating a country an LLDC, originally adopted by the UN Committee for Development Planning in 1971, have been modified several times. Criteria have included low: per-capita-income, literacy, and manufacturing share of the country's total gross domestic product. There is continuing concern that the criteria should be more robust and less subject to the possibility of easy fluctuation of a country between less developed and least developed status.

 

Letter of Credit - A financial document issued by a bank at the request of the consignee guaranteeing payment to the shipper for cargo if certain terms and conditions are fulfilled. Normally it contains a brief description of the goods, documents required, a shipping date, and an expiration date after which payment will no longer be made.- An Irrevocable Letter of Credit is one which obligates the issuing bank to pay the exporter when all terms and conditions of the letter of credit have been met. None of the terms and conditions may be changed without the consent of all parties to the letter of credit.- A Revocable Letter of Credit is subject to possible recall or amendment at the option of the applicant, without the approval of the beneficiary.- A Confirmed Letter of Credit is issued by a foreign bank with its validity confirmed by a U.S. bank. An exporter who requires a confirmed letter of credit from the buyer is assured payment from the U.S. bank in case the foreign buyer or bank defaults.- A Documentary Letter of Credit is one for which the issuing bank stipulates that certain documents must accompany a draft. The documents assure the applicant (importer) that the merchandise has been shipped and that title to the goods has been transferred to the importer.

 

LETTER OF CREDIT (Confirmed) - A letter of audit issued by one bank to which another bank added its irrevocable confirmation to pay, thereby obligating itself in the same manner as the opening bank. For example, "we hereby confirm this credit and undertake to pay drafts drawn in accordance with the terms and conditions of the letter of credit."

 

LETTER OF CREDIT (Cumulative) - A revolving letter of credit which permits any amount not utilized during any of the specified periods to be carried over and added to the amounts available in subsequent periods.

 

LETTER OF CREDIT (Deferred Payment) - A letter of credit issued for the purchase and financing of merchandise, similar to acceptance letter of credit, except that it requires presentation of sight drafts which are payable on installment basis usually for periods of 1 year or more. Under this type of credit, the seller is financing the buyer until the stipulated time his drafts can be presented to the bank for payment. There is a significant deference in the bank's commitment, depending on whether the negotiating bank advised or confirmed the letter of credit.

 

LETTER OF CREDIT (L/C):A document issued by a bank per instructions by a buyer of goods authorizing the seller to draw a specified sum of money under specified terms. Issued as revocable or irrevocable.

 

LETTER OF CREDIT (McLean) - A letter of credit which requires the beneficiary to present only a draft or a receipt for specified funds before he receives payment.

 

LETTER OF CREDIT (Negotiable) - A letter of credit issued in such form that it allows any bank to negotiate the documents. Negotiable credits incorporate the opening bank's engagement, stating that the drafts will be duly honored on presentation, provided they comply with ail terms of the credit.

 

LETTER OF CREDIT (Non-Cumulative) - A revolving letter of credit which prohibits the amount not utilized during the specific period to be available in the subsequent periods.

 

LETTER OF CREDIT (Revocable) - This type of letter of credit is not as legally binding as an irrevocable credit. It can be modified or canceled without the beneficiary's consent, unless the negotiation has already taken place. The issuing bank must honor the drafts negotiated before the notice of revocation or amendment has been made. Negotiability is restricted to the advising bank and confirmation is usually not available.

 

LETTER OF CREDIT (Revolving) - A credit which includes a provision for reinstating its face value after being drawn under within a stated period of time. This kind of credit facilitates the financing of on going regular purchases.

 

LETTER OF CREDIT (Standby) - One issued for the express purpose of effecting payment in the event of default. The issuing bank is prepared to pay but does not expect to as long as the underlying transaction is properly fulfilled.

 

LETTER OF CREDIT (TRAVELER'S) - A letter of credit which is issued by a bank to a customer preparing for an extended trip. The customer pays for the letter of credit at the time of issuance, and a bank issues the letter for a specified period of time in the amount purchased. The bank furnishes a list of correspondent banks where drafts against the letter of credit will be honored. The bank also identifies the customer by exhibiting a specimen signature of the purchaser in the folder enclosing the list of correspondent banks. Each bank, which honors a draft, endorses on the letter of credit the date when a payment was made, the bank's name, the amount drawn against the letter of credit, and charges the issuing bank's account.

 

Letter of Credit ADVICE OF CREDIT - Communication by the advising bank that a letter of credit has been issued. The primary responsibility of the advising bank is to take care in establishing the authenticity of the credit.

 

Letter of Credit ADVISING BANK - A bank which acts as an agent of the issuing bank of a letter of credit in supplying the details of the letter of credit to its beneficial, without any responsibility or engagement on its part.

 

LETTER OF CREDIT, CONFIRMED:A letter of credit containing a guarantee on the part of both the issuing and advising banks of payment to the seller, provided the seller’s documentation is in order and the terms of the letter of credit are met.

 

Letter of Credit:A conditional order in writing, issued by a buyer's bank, guaranteeing to pay the seller upon presentation of stipulated documents, strictly in accordance with the credit. It is strongly recommended that every exporter and importer has a copy of the "Uniform Customs and Practice for Documentary Credits", International Chamber of Commerce publication 500. These are available from most major Chambers of Commerce, or from us at AUD 20.00 including postage, handling and GST, to Australian addresses only.

 

Letter of Credit-ACCEPTANCE FINANCING - An acceptance transaction unrelated to a letter of credit, created for the purpose of borrowing, is referred to as acceptance financing. In contrast to direct loans, the bankers acceptance provides a vehicle of financing customers without the use of bank funds. By accepting a draft the bank merely adds its name to a bill which then can be used to raise funds by selling in the open market.

 

Letter of Indemnity - Written statement in which one party undertakes to compensate another for the costs and consequences of carrying out a certain act, for example, a shipper who has been delayed in sending an original Bill of Lading to the receiver may instruct the master of the ship or the shipowner to release the goods to a named third party without production of an original Bill of Lading. The master or owner, if they agree, may require a letter of indemnity from the shipper for the consequences of complying should it turn out that the named party is not entitled to take delivery of the goods. It should be noted that, as a rule, any such letter that seeks to indemnify against an act, which is intended to defraud an innocent third party, is unenforceable in a court of law.

 

The above details describes about terms called in shipping such as Letter of Credit,Less than Truck Load,Less Developed Country ,letter of credit (revocable),letter of credit (negotiable),letter of indemnity etc. These phrases may help importers and exporters on their day to day business activities. The readers can also add more information about terms used in shipping business below this post.Terms used in shipping such as Laycan or LC,Laytime,Laytime Saved,LAY-UP,League of Arab States,Leg. Chgs.,Legal Weight

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