What are the essential checks when the Letter of Credit is received?


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Essential checks when the Letter of Credit is received
 
It is essential to check the Letter of Credit as soon as it is received. The following is a checklist to be reviewed immediately on receipt of a Letter of Credit:
  • Is the credit subject to UCP500?
  • Are there any terms or conditions within the credit which cannot be met? If so immediate arrangements must be made with your importer for the credit to be amended.
  • Can the goods be shipped within the period set by the Letter of Credit?
  • Do any documents need to be legalised?
  • Can the mode of transport specified be used?
  • Can shipment be made from the port/airport specified?
  • Are the prices correct?
  • Do the credit terms conform with the underlying sales contract?
  • Are the names and addresses of both opener and beneficiary complete and correct?
  • Is the credit irrevocable on the part of the overseas bank? (under UCP500 this is the case unless stated otherwise)
  • Are drawings under the credit negotiable or payable in the UK rather than abroad?
  • Are the description, price and quantity of the goods are in accordance with the terms of the contract? (Remember that under-drawing a credit may sometimes cause problems, e.g. if trade discount has been forgotten when the opener instructed his bank)
  • Are the insurance requirements of the credit acceptable?
  • Can the required documentation be obtained?
  • If part-shipments and transhipment of goods are prohibited, can the full quantity of the goods be exported on a vessel direct from the port of loading to the port of destination?
  • Can the goods be shipped within the period specified and documents presented to the bank within 21 days from the date of shipment (unless a shorter time is stipulated) but, in any case before the credit expires?

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