Glossar Trade & Export Finance
In connection with documentary credits "about" means a tolerance of plus/minus 10% regarding the documentary credit value, unit price or the quantity of the goods, depending on the context in which the tolerance is mentioned. See UCP Art. 30a.
Acceptance of a bill of exchange occurs when the drawee commits himself to pay by putting his signature on the bill of exchange. The drawee's signature alone is a valid acceptance and is usually made across the left margin of the bill of exchange.
Documentary credits which, in addition to the other documents, require presentation of a term draft drawn on the bank nominated as the accepting bank under the documentary credit. See UCP Art. 6b.
This term is often used in connection with simple guarantees (Code of Obligations 492) and joint and several guarantees (Code of Obligations 496) and means that the obligation of the simple or joint and several guarantor is legally dependent on the underlying contract. See also under «Surety».
The buyer uses an advance payment guarantee to ensure that any advance payment on the contract price made before delivery of the goods (or advance payment of the full contract price) will be reimbursed if the seller fails or partially fails to meet his or her contractual delivery obligations.
In the case of documentary credits available by deferred payment the beneficiary thereof may, under certain circumstances, be able to obtain prepayment at sight from the nominated/issuing bank subject to the deduction of interest calculated at the usual (market) rate. The purchaser is not debited for the value of the documents until the maturity date.
Forwarding of a documentary credit received from the issuing bank to the beneficiary (seller). For information on the responsibilities of the advising bank see UCP Art. 2 and 12. Bank guarantees are often advised electronically (SWIFT/coded telex) via a bank in the beneficiary's country of domicile.
Transport document issued for carriage by air in the form of confirmation of acceptance of goods for carriage. Not a negotiable instrument. The conditions of carriage are uniformly laid down in the Warsaw Agreement of 12.10.1929 and the subsequent additional protocols. «House air waybills» are also common. See UCP Art. 23.
Insurance "against all risks." This clause is often specified in documentary credits. Banks accept insurance documents in which this clause appears even if the same document excludes coverage of certain risks. See UCP Art. 28h.
Amendment of the current documentary credit conditions (e.g. extension of the documentary credit's validity period, shipping deadline, etc.) as given by the issuing bank on instructions from the purchaser. See Art. 10a UCP.
Magesterial authentication of a signature on a public document as well as the quality in which the signatory of the document is acting. If applicable, it may also include the authentication of seal and stamp appearing on the document.
If documents containing discrepancies are presented to the nominated bank under a documentary credit, the bank can forward the documents to the issuing bank for approval, with the beneficiary's agreement. Because of the risk of loss in transit and delays resulting in interest loss, however, it is recommended that the beneficiary first tries to correct the documents but, if that is not possible, asks the nominated bank to contact the issuing bank for authorisation to accept the discrepancies.
The beneficiary of a documentary credit may assign the proceeds under the documentary credit, fully or partly to a third party. See UCP Art. 39. Usually the beneficiary informs the issuing or advising bank that his/her claims or partial claims under the documentary credit were assigned and asks the bank to advise the assignee (third party) that it has acknowledged the assignment. The assignment of proceeds under the documentary credit as described here is to be distinguished from the transfer of the documentary credit pursuant to Art. 39 UCP. The validity of the assignment is not dependent on the bank's approval. In contrast, the transfer requires the agreement of the nominated bank. An assignment is possible regardless of whether the documentary credit is transferable.
Documentary credits must indicate how they are available, i.e.:
by sight payment: payment on receipt of the documents by the issuing bank or the bank designated in the documentary credit,
by deferred payment: payment after a period specified in credit, often calculated as number of days after the date of presentation of the documents or after the shipping date,
by acceptance: acceptance of a draft (to be presented together with other documents) by the issuing bank or by the bank designated in the documentary credit, and the payment thereof at maturity,
by negotiation means: advance or being ready to advance funds to the beneficiary. See also UCP Art. 6. See also remarks under «Risk of loss in transit» (place of availability).
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