Letter of credit

Task 1. Read the text.

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1. Why is the certificate of origin issued

2. What is the certificate of origin

3. What organization issues the certificate of origin

Where was the certificate of origin issued

When was the certificate of origin issued

What information is usually given in the certificate of origin

A letter of credit is a promise made by the buyer’s bank (the opening or issuing bank) to send a certain sum of money to the seller’s bank (the advising bank), to be credited to the seller, known as the beneficiary, provided he fulfils his part of the sales contract. It is also known as a documentary credit.

The most popular term of payment in cash is by letter of credit (L/C). A letter of credit is a letter from one bank to another bank, by which a third party, usually customer is able to obtain money. There are some types of letters of credit: circular L/C, confirmed L/C, direct L/C, documentary L/C, irrevocable L/C, limited L/C, traveler’s L/C, unconfirmed L/C, etc.

Opening/issuing bank банк-эмитент advising bank банк, производящий выплату по аккредитиву beneficiary бенефициар, получатель по аккредитиву documentary credit документальный аккредитив

Types of letter of credit

1. A revocable letter of credit can be cancelled or changed without the seller’s agreement. As this doesn’t offer the seller much control over payment, this type of letter of credit is rarely used.

2. An irrevocable letter of credit can be cancelled or changed, but only with the agreement of all parties.

3. A confirmed letter of credit is always irrevocable. If the seller feels that the risk of not receiving payment is still too high, for example because the buyer’s country’s economy is unstable, he can arrange for a bank in his own country to confirm the letter of credit (this bank is then known as the advising bank).

revocable отзывной irrevocable безотзывный confirmed подтверждённый (аккредитив) unstable неустойчивый, нестабильный

Task 2. Fill in the blanks with the prepositions where necessary.

1. Types … payment accepted … business transactions

2. Payment … letter … credit

3. A letter … one bank … another bank

4. The payment … the goods being exported

5. To be effected … shipping documents

6. A way … sending money … some one

Task 3. Match each word or expression on the left with the correct definition on the right.

1. Payment a) sum of money (to be) paid

2. Letter of credit b) a written order to a bank given and signed by

3. Invoice someone who has money deposited there

4. Cheque c) a list of goods sold with the price charged

d) a letter from one bank to another bank

Task 4 Переведите:

1. Obtain the drawee’s consent

2. We have cancelled the above credit

3. The credit has been cancelled under confirmation to us

4. sign the invoice which please send us

5. According to the terms of the credit the charges are...

6. All the expenses should be for your account

7. The above credit has expired

8. The credit has expired with an unutilized balance of...

9. The credit has been cancelled

10. In reimbursement we have transferred the sum indicated by them

11. Please credit us with … as instructed

12. We authorize you to debit their account

13. We enclose the cheque for…

14. At the drawer’s request we have added the sum of…

15. Since the credit is payable with the above bank reimburse yourselves on them

16. Please state your correspondent on whom we may reimburse ourselves

17. The credit will be utilized upon presentation of the following documents

18. We have arranged for the cancellation of the credit indicated by you

19. We confirm having charged their account with their consent

20. Our charges in connection should be

Royal bank London, England	Letter of credit
Applicant Shan Import Co/ 176 Stepney Road London SE23 7HL U.K.	Beneficiary Rajah Tea Company 65 Gandhi Road Bombay 297645, India	Advising bank Anglo-Indian Bank Governor’s Bldgs. Bombay 273645, India
Reference no. HFDS9765	Date and place of issue 20 June 1999, London	Date and place of expiry 27 July 1999, Bombay
Transshipment [ ] Allowed [x] not allowed Partial shipment [ ] Allowed [x] not allowed	Amount Rs. 75 000 (seventy-five thousand rupees)
Credit available with Anglo-Indian Bank, Bombay by negotiation against the documents named and beneficiary’s draft at 60 days drawn on Royal bank, London U.K.
Shipment/dispatch From Bombay	For Transportation to London	Not later than 6 July 1999
Documents to be presented 1. Commercial invoice in 6 copies indicating L/C number 2. Full set of clean bills of lading made out to order of issuing bank of L/C marked prepaid and notifying applicant also indicating this L/C number 3. Certificate of origin 4. Packing list These documents to be presented within …. Days of the issue of the transport documents but within the validity of the credit.
Instructions for advising bank Please advise beneficiaries of the opening of this credit, adding your confirmation. Method of reimbursement At maturity we will reimburse you according to your instructions Documents should be forwarded be us by air mail. James Anderson For Royal Bank

Look at the letter of credit and answer the questions

1. Who is the buyer?

2. Who is the seller?

3. Which is the opening account?

4. Which is the advising bank?

5. What kind of letter of credit is it?

6. What kind of draft will be attached to the transport document?

B-1

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