The advising bank notifies the seller (beneficiary) that a Documentary Letter of Credit has been opened by the buyer (applicant) naming him as the beneficiary. Before the seller formally accepts the Credit and its obligation to perform, the seller must review the terms and conditions for performance, and the Credits documentary requirements to determine if he can provide them after shipment. If the seller cannot meet all of the Credits requirements, or does not agree to the Credit's terms and conditions, the seller must communicate and negotiate with the buyer to change them.
Definition of a Letter of credit applications
The application from the buyer to his bank for a documentary letter of credit.
Purpose of a Letter of credit applications
The purpose of the Documentary Letter of Credit Application is to request that a letter of credit be issued with the terms and conditions in the application. The application is also used as a contract between the bank and the buyer for reimbursement of the credit extended to the buyer.
Process for a Letter of credit applications:
The Letter of Credit Application is completed by the buyer and given to the issuing bank.
The bank issues the Letter of Credit to the Beneficiary through the advising bank. Fields for a documentary letter of credit application:
Applicant
Issuing bank
Date of application
Expire date
Transferable credit
Issued by teletransmission
Place of presentation
Confirmation of the credit
Beneficiary
Partial shipments
Transhipments
Amount in figures & words
Insurance
Shipment as defined in ucp 500
Credit available with nominated bank
Terms
Goods
Value document
Transport document
Insurance document
Certificates
Other documents
Additional instructions
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