INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 1 L/C 信用证 L/C 信用证 Unit 77

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 2 L/C 信用证 Period:1 class Date of writing:8/12,2006 Date of practice:12/12,2006 Objective and requirement: to give a clear picture of the process of L/C, and let the students know how it performs in the international trade. Key points and difficulties: why use L/C,and how it works. Teaching method : multimedia demonstration Materials needed: multimedia classroom

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 3 overview Review Introduction of L/C 幻灯片 6 幻灯片 6 The process of L/C 信用证流程 信用证流程 exercise Points covering an L/CL/C 信用证L/C 信用证 Sample of an L/C

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 4 Establishing business relations Making an offer Placing an order Acceptance/rejection Making counter offers Signing a contract Letter of self-introduction Or enquiry The process of international trade Review

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 5 Definition A bank’s L/C is customarily used in foreign trade, is to finance the sales and purchase of commodity from abroad by combining ready money to the exporter with credit to the importer Such an L/C consist of a promise by the opening bank that he will honor-draft drawn by the seller,provided that the seller surrenders to the bank a complete set of shipping documents evidencing that the goods shipped are in accordance with the stipulations in the L/c. In short, an L/C is a tool or instrument of payment which is guaranteed by a bank. BACK

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 6 信用证流程 信用证的主要当事人及流转程序 Applicant 申请人 ( 买 ) Beneficiary 受益人 ( 卖 ) Issuing bank 开证行 Advising bank 通知行 s/c 通 知 3 交单5交单5 议付8议付8 付 款 10 2 L/C 偿付 9 装货 4 Applicant 申请人 ( 买 ) Beneficiary 受益人 ( 卖 ) Issuing bank 开证行 Advising bank 通知行 1 1开证1开证 6 7

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 7 1 after the buyer and seller agree on terms of a sale,the buyer arrange for his bank to open an L/C,in favor of the seller. Note : the buyer will need to have a line of credit established at the bank or provide the bank cash collateral for the amount of the L/C.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 8 2 the buyer’s issuing bank prepares the L/C,including all of the buyer’ instructions to the seller concerning shipment and required documentation the buyer’s bank sends the L/C to the seller’s advising bank

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 9 3 the seller’s advising bank forwards the L/C to the seller

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 10 4 the seller carefully reviews all conditions stipulated in the L/C. If the seller cannot comply with any of the provisions, it will ask the buyer to amend the L/C after final terms are agreed upon, the seller ships the goods to the appropriate port or location.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 11 5 after shipping the goods,the seller obtains the required documents. Please note that the seller may have to obtain some documents prior to shipment. the seller presents the documents to its advising bank along with a draft for payment.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 12 6 the seller’s advising bank reviews the documents. If they are in order,it will forward them to the buyer’s issuing bank.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 13 7 The issuing bank forward the documents to the buyer To get the goods Why get the documents ?

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 14 8 With a confirmed L/C, the advising bank will pay the seller (cash or a banker’s acceptance). paying

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU , once the buyer’s issuing bank receives and reviews the documents, it either(1)pays if there no discrepancies; or (2)forwards the documents to the buyer if there are discrepancies for its review and approval.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU The buyer pay for the issuing bank

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 17 exercise 1 please complete the following graph Applicant 申请人 ( 买 ) Beneficiary 受益人 ( 卖 ) Issuing bank 开证行 Advising bank 通知行 Applicant 申请人 ( 买 ) Beneficiary 受益人 ( 卖 ) Issuing bank 开证行 Advising bank 通知行 Think about it Think about it

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 18 exercise 2 Describe the above process in your own words. 3 think about the import information written in an L/C.

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 19 后记 本节课的目的是让学生熟悉信用证的一般流程，让学生对 外贸活动中的付款方式有一定的了解。通过这节课，要让 学生基本上能够用英语来描述信用证的基本流程，并为下 一步学习信用证内容的起草打好基础，也让学生在工作之 前对工作流程有一定的了解。然而，理论与实践总是有一 定的差距的，实际工作当中要复杂的多，程序可能不会这 么简单，也不会这么循序渐进，但应该能起一个基本匡架 的作用的。 由于初次用多媒体讲课，生疏难免，但今后我一定会更加 努力争取把课上的更好。外贸课程需要与实践相结合，我 也要不断学习，多了解实际情况，争取把最新的知识传给 学生。

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 20 L/C 信用证 Points in an L/C Part 1 L/C itself Its kinds Number Opening bank The date & place of issuing The names of beneficiary & applicant The amount Time of validity

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 21 L/C 信用证 Part 2 Requirement of goods Specification, quality,quantity, packing & other particulars Part 3 About transportation Time of shipment, mode of shipment,port of shipment (loading & destination), carriage prepaid or forward, partial shipment & and transshipment allowed or not. Part 4 documents & evidence for payment Draft,invoice (including packing list,weight memo,certificate of origin, inspection certificate ), bill of lading, insurance policy /certificate & other documents

INTERNATIOANL BUSINESS DOCUMENTS COPYRIGHT © ZOU YU 22 L/C 信用证 Part 5 Any special requirement Part 6 Clauses covering responsibility of payment by issuing bank in favor of the beneficiary or the legal holder of draft Part 6 The uniform of custom & practice for documentary L/C ( 跟单 信用证统一惯例 )