Back-to-back letters of credit are commonly used by traders who act as an intermediary between the source supplier & the final buyer.
In this process, two separate Credits are issued:
Transferable letters of credit allow the seller (‘first beneficiary’) to transfer the credit, fully or partially, to one or more third parties (‘second beneficiary’). In order for this practice to be effective, the credit must clearly state that it is transferable.
Term of the Week! – Sight LC
A sight letter of credit is a document that ensures payment against any services or goods that are being delivered. The amount is payable when the party presents the Sight LC along with other necessary documents.
A company offering a sight letter of credit (Financial institute upon request of applicant) commits to pay an agreed amount of money to the other party when all of the provisions in the LC are met.
Confirmed letters of credit is an arrangement where a confirming bank adds its undertaking in addition to that of Issuing bank to honor a complying presentation
CIF – Cost, Insurance, and Freight
The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
The seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the products are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the products are on board the vessel. The buyer bears all costs from that moment onwards.
