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introduction In simple terms, a documentary credit is a conditional bank undertaking of payment. Expressed more fully, it is a written udertaking by a bank given to the seller at the request, and in accordance with the instructions, of the buyer to effect payment up to a stated sum of money, within a prescribed time limit and against stipulated documents. DEFINITION Unit 1 Letter of Credit

parties to an L/C expiry date and place amount and currency terms of payment clauses of shipment clauses on documents additional/special conditions description of goods instruction banker’s guarantee customs ﹠ practice L/C Opening

ICC mailed L/C L/C by tele-transmission Bankers;SWIFT

Letter of Credit Irrevocable Documentary Credit Bank of Brazilia London Office 110,Leadenhal London, E.C.3. No th March, 20__ The Argo Exporp Co. Ltd. 240, Biliter Street London, E.C.4. Dear Sirs, On the advice of our Bahia Branch we would inform you that they have opened in your favor an Irrevocable Letter of Credit No under which we will accept a bill drawn on us by you at 90 days sight for an amount not exceeding US$14 000(FOURTEEN THOUSAND USDOLLARS ONLY) on account of Messrs. Jose Carcia & Co. Bahia, Brazil. All bills drawn under this Credit must be marked Drawn under Bank of Brazilia, Bahia Branch Credit No and must be accompanied by the following documents:

-- Full set of Clean ON Board Bill of Lading, made out to order and endorsed in blank; -- Invoice; -- Insurance Policy or certificate for the CIF value plus 10%. Evidencing the shipment of eight motorcycles to Bahia. This Credit expires on 15th September, 20__. Part shipments are not permitted. We hereby undertake to honor all drawings presented to us in accordance with the terms of this Credit. Please note that the conditions of this Credit must be strictly complied with, as otherwise we may not be able to accept bills drawn under it. Yours faithfully, For bank of Brazilia Pedro Gonzales (Manager)

It should be the same as that in the L/C. Usual names include such words as“Beneficiary’s Certificate”,“Be neficiary’s Declaration” ， “Beneficiary’s Statement”. Contents 3. Format It is the heading of L/C opened in SWIFT form.It is the code between bankers’ communication when the L/C is more than one page,each page carries the same heading. According to International Chamber of Commerce,SWIF TL/C has two formats:MT700 and MT701. Each has fixed content for the purpose of reading and handing. It covers the following items:Sequence of Total ， which refers to the total pages of L/C and the page number of this page; Form of Credit ， which refers to the form of credit,i.e. revocable ， documentary or clean ， confirmed or unconfirmed ， sight or usance ， transferable or nontransferable ， revolving ， reciprocal ， back to back or standby ； Credit Number ； Date of Issue ； Expiry 。 4. Clause of L/C Itself 1. Heading 2. Name and Address of Issuing Bank Contents

10. Documents Required 7. Clause of Draft It includes Tenor of draft and Drawee It gives the details of shipment,which refers to loading port,port of destination, latest date of shipment, partial shipment and transshipment. 8. Clause of Shipment It is the description of goods under l/C, including name of commodity, quantity, unit price, contract or order number, marks and packing. It specifies the documents required for negotiation or payment, and the requirements. 5. Applicant and beneficiary 6. Amount and Currency 9. Description of Goods Contents

It specifies the assumption of banking charges. Contents 13. Confirmation It specifies the special requirements for presenting, filling and sending of documents. It refers to instructions given by the issuing bank to other bankers involved in this L/C. 14.Instruction 11.Additional Conditions 12. Details of Charges It shows “Without” or “May add” to indicate whether the L/C is confirmed by another bank except the opening bank. Contents

Please insert the word “about” before the quantity and amount in your L/C as it is impossible for us to ship the goods in the exact quantity as contracted. We suppose that the above mistakes are clerical and hope you will make the necessary amendments immediately by fax so that we can ship the goods in time. Your prompt attention to the above will be appreciated. Yours faithfully, Practice