| (1) Applicant |
- A person requesting to open L/C. Importer, Opener, Accountee (A person settling
payment),Drawee(drawee for bill of change ), Consignee, Accredited Buyer.
- The applicant has an obligation to pay L/C payment of an opening bank's request on
the various expense, an obligation for the sales contract with for a beneficiary and
has to bear an indemnity obligation for L/C payment of a confirming bank. |
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| (2) Issuing bank (opening bank) |
- A ban confirms demand for L/C payment, opening L/C upon an applicant request
and instruction.
- An obligation of an opening bank |
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1 Although there is a purchasing bank responsible for a payment and guarantee an
opening bank(including confirming bank) has the original payment obligation.
2 Once a purchasing bank Nego the shipping documents without vice, the bank can
not refuse to payment request. (The Sub-Article 9-1 of iv of UCP) |
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| (3) Advising bank |
- A bank located in the exporting location in charge notifying the opening of L/C,
amendment and cancellation upon a opening bank's request.
- Normally a notification is made by an opening bank's main office or from one of the
bank that concluded correspondent agreement or through an exporter's
correspondent bank.
- Duty of an advising bank |
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1 Bank that received L/C advising inquiry : If no intention to participate or if the
authentification is doubtful by the appearance of L/C, the bank should notify to an
opening bank immediately and either resign from the advising bank position or
request to confirm the authentification. (The Article No. 7 of UCP )
2 Notifying to a beneficiary regardless of authentification doubtfulness: Should notify
with [The fact that the authentification is doubtful].
3 For Full cable L/C : An advising bank will transfer the contents received by cable to its dedicated form and deliver to a beneficiary. Since this is will act as the master L/C, the later arrived mail L/C from an opening bank will be disposed without examination by an advising bank.(The Sub-Article No. 11 -i of UCP ) |
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| - Measures of UCP 500 to intensify an advising bank's duty and obligation |
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| 1 Solving uncleared instructions |
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- Notification duty has been intensified for the parties to confirm with an opening
bank to reconfirm the instruction when the contents of the instruction is unclear or when unidentified bank request to notify L/C without prior notification.
(The article no. 7 of UCP) |
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| 2 Measures for Short cable |
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- If the arrived L/C from an opening bank using cable has only simple information
about shipping date, items, amount and if there is "Full details to follow" wording at the end of the notification statement,
- An opening bank must dispatch the mail L/C that contains the same contents as
the prior notified contents immediately.
- If the later arrived mail L/C contains a different contents from the prior notified
information or if mail L/C was never dispatched: An advising bank should notify the fact to an opening bank and request for correction measure promptly.
(The Sub-Article No11-b of UCP) |
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| (4) Confirming bank |
- A bank that executes the 2nd payment undertaking according to an opening bank
request and the bank also committed to take over or disburse the bill issued by the
L/C equally with an opening bank. L/C that indicated the name of confirming bank
is called confirmed L/C.
Cautious)-Be preventative to the possible situation when dealing with the countries
with poor foreign currency condition or a bank with the poor creditability at the
developing countries and make sure to nominate a confirming bank
- Although an importer and a purchasing bank may choose between an opening bank
and confirming bank to request payment, to change the terms of L/C, the clearly
stated consent of a confirming bank is necessarily for a beneficiary and such to
excercise the right otherwise, the parties may not insist the right to a confirming
bank. |
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| (5) Beneficiary |
- Refers to all the L/C receiving parties such as Exporter, Seller, Shipper, payee,
Drawer, Accredited an also called Addressee User.
- Shoulders duty to perform sales contract. May request payment by presenting the
documents without vice in accordance with L/C terms however, may not take advantage of the contract relations between an opening bank and applicant.
(The Sub-Article No. 3-b of UCP) |
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| (6) Negotiation bank (purchasing bank) |
- A bank located in the exporting country that performs Nego and paying export earning
when an exporter presents the shipping documents on the basis of L/C terms.
- Since a purchasing bank is bestowed the right of bona-fide-holder, an opening bank
must comply to the unconditional disbursement as long as the present documents have no vice.
- Definition of Nego (UCP 500) |
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1 Nego means payment of a purchasing bank upon accepting bill of change and the
transportation documents.
2 The Nego itself is interpreted as a bank's commercial transaction |
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| (7) Transferring bank |
- For transferable L/C: A bank that transfers L/C upon request of the orignal beneficiary
who received L/C in the first time.
- If Nego, payment, taking over and the name of confirming bank is indicated on L/C:
The bank is the transferring bank. For freely negotiable L/C : Nominate a specific bank
as a transferring bank and transfer through the bank. |
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| (8) Paying bank (paying bank) |
- If a branch or a Depositary Correspondent Bank of an opening bank is located at the
exporting country: An opening bank indicates wording saying that the Nego is only
possible by the bank to an exporter and the bank is called paying bank.
- L/C with nominated paying bank is called Straight L/C or Payment L/C.
- If there is a nominated bank on L/C the bank will eventually become the paying bank
but if not, an opening bank becomes the paying bank. |
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| (9) Accepting bank |
- If a bill of changed term issued by a beneficiary is a usance draft, a drawee bank
takes over the shipping documents from the exported location before the payment is
made, and the bank is to pay a draft on the maturity date of the draft which refers to
the bank that takes over a usance draft. |
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| (10) reimbursing bank (settling bank) |
- If a purchasing bank is not Depositary Correspondent Bank of an opening bank:
Nominate third banks that have Depositary Correspondent relation with the bank and
instruct the bank to send the bill of change issued by an exporter in the order of the
bank.
- Third bank that obtained a reimburse authorization from an opening bank in advance
withdrawal the amount requested for reimbursement from the deposit account of an
opening bank where there is a reimbursement request from a purchasing bank and
deposit to the account of a purchasing bank. This kind of bank is called
reimbursing bank. |
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Trade Helper 
L/C(Letter of Credit)
{1} Letter of credit
[5] L/C transaction involved parties 
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