Unit 4 Who Wins the Lion's Share !

Objectives Focus Warming up 2.1 Communicating in writing 2.2 Names and addresses 2.3 Layout and style 2.4 Thinking about your reader 2.5 Sending messages Sum-up Assignment

Documentary Credits / Documentary L/C A letter issued by a bank At the request of an importer of goods The bank promises to pay a beneficiary (who?) The bank will pay or accept draft or negotiate it if ----documents relating to the dispatch of the goods are in order ( a bill of lading, an invoice, an insurance document, one or two supplementary documents) ----shipment has been made as specified usually exporter

lend its name and its good offices to the importer For bank lend its name and its good offices to the importer putting itself in the place of the importer taking the responsibility in favor of exporter taking the risk that it is unable to be reimbursed by the importer How to avoid it? Look to the worthiness Require to lodge some securities Deposit a portion of the cost of the goods

For exporter documentary L/C is a most satisfactory method of payment

For importer Some considerable advantages Pay the bank’s charges for opening the credit

The exporter must check the credit in his favor on the spelling of both the exporter’s and the importer’s names the mount of the credit (sufficient!) irrevocable or revocable, confirmed or unconfirmed description of the goods quantity (about , circa) permission of shipping the goods on deck consideration of getting all the documents required by the buyer, such as a certificate of quality and consular invoice

Is it absolutely safe to be paid and receive the merchandise by the payment of L/C? Not 100% safe.--- Banks issuing letters of credit deal in documents not in merchandise. ---The quality and quantity of merchandise shipped ultimately depends on the honesty and integrity of the seller. ---If the buyer discovers that the merchandise has been mislabeled or the cartons are empty, he should sue the seller not the bank.