Lesson11TheLetterofCredit(1)

1、Lesson ElevenThe Letter of Credit(1)Business Knowledge: (1)The definition of the letter of credit (2)The unique and characteristic feature of the letter of credit (3)The relevant parties of the letter of credit and their roles in its process of operation A.The applicant B.The opening bank C.The advi

2、sing bank D.The beneficiary E.The negotiating bank F.The confirming bank (4)The major contents of the letter of credit (5)The documents being the only concern of the banks in credit operation. In international trade it is almost impossible to mach payment with physical delivery (實際交貨實際交貨) of the goo

3、ds, which constitutes conflicting problems for trade, since the exporter prefers to get paid before releasing the goods and the importer prefers to gain control over the goods before paying the money. The letter of credit is an effective means to solve these problems. Its objective is to facilitate

4、international payment by means of the credit-worthiness of the bank. Release: to allow to go vt. 釋放釋放，放出，免除，允許發(fā)表，放出，免除，允許發(fā)表 press release 新聞稿；通訊稿新聞稿；通訊稿 release from 解除；豁免解除；豁免 Release someone from a debt 免除某人的債務免除某人的債務 他在服刑五年后從獄中釋放出來。他在服刑五年后從獄中釋放出來。 He was released from prison after serving a sente

5、nce of five years. 這條狗到了晚上就放出來。這條狗到了晚上就放出來。 The dog is released in the evening. 戰(zhàn)爭爆發(fā)時我解除了我的合同。戰(zhàn)爭爆發(fā)時我解除了我的合同。 I was released from my contract when the war broke out. 我們必須在明晨五點以前將這條新聞發(fā)布出去。我們必須在明晨五點以前將這條新聞發(fā)布出去。 We have to release the news before 5 oclock tomorrow morning. gain control over: to have pow

6、er over 控制（?。?，得到對控制（?。?，得到對 的控制的控制 她最終控制了自己。她最終控制了自己。 She finally gained control over herself. 政府控制住了通貨膨脹。政府控制住了通貨膨脹。 The government gained control over the inflation. This method of payment offers security to both the seller and the buyer. The former has the security to get paid provided (假如假如) he p

7、resents impeccable（沒有缺陷的）（沒有缺陷的）documents while the latter has the security to get the goods required through the documents he stipulates in the credit. This bilateral security is the unique and characteristic feature of the letter of credit. Impeccable= stainless , flawless without fault or error;

8、not capable of sin adj. 無瑕疵的；沒有缺點的無瑕疵的；沒有缺點的 對于轉(zhuǎn)基因作物和食品，安全紀錄是無懈可擊的。對于轉(zhuǎn)基因作物和食品，安全紀錄是無懈可擊的。 In the case of GM crops and food, the safety record is impeccable. (gm food (genetically modified food) 轉(zhuǎn)基因食品轉(zhuǎn)基因食品) 他說一口純正的英語。他說一口純正的英語。 He speaks impeccable English. Bilateral: having two sides or parts; affec

9、ting or undertaken by two parties; having identical parts on each side of an axis adj. 雙邊的；有兩邊的雙邊的；有兩邊的 bilateral trade 雙邊貿(mào)易雙邊貿(mào)易 bilateral agreement 雙邊協(xié)定雙邊協(xié)定 bilateral talks 雙邊會淡雙邊會淡 bilateral contract 雙邊契約雙邊契約 迄今為止，只有德國和韓國于中國簽訂了雙邊協(xié)議。迄今為止，只有德國和韓國于中國簽訂了雙邊協(xié)議。 To date, only Germany and South Korea have

10、 bilateral agreements with China. Unique: highly unusual or rare but not the single instance; radically distinctive and without equal; the single one of its kind adj. 獨特的，稀罕的；獨特的，稀罕的；數(shù)數(shù) 唯一的，獨一無二的唯一的，獨一無二的 unique style 獨特的風格獨特的風格 unique feature 特色；特性；獨到之處特色；特性；獨到之處 unique opportunity 唯一機會；極難得的機會唯一機會；

11、極難得的機會 unique ability 獨有能力獨有能力 我們都擁有獨特的技能和天賦。我們都擁有獨特的技能和天賦。 We all have unique skills and gifts. “Letter of credit” is often shortened as L/C or L.C. and is sometimes referred to as “bankers commercial letter of credit”, “bankers credit”, “commercial credit” or simply “credit”. Modern credits were i

12、ntroduced (開始采用開始采用)in the second half of the 19th century and had substantial development after the First World War. The credit is a letter issued by a bank at the request of the importer in which the bank promises to pay upon presentation of the relevant documents. It is actually a conditional ban

13、k undertaking（承諾）（承諾） of payment. The letter of Credit (L/C、L/C)信用證信用證: The credit is a letter issued by a bank at the request of the importer in which the bank promises to pay upon presentation of the relevant documents. Undertaking: a promise; any piece of work that is undertaken or attempted; n.

14、事業(yè)；企業(yè)；保證事業(yè)；企業(yè)；保證 我們要繼承他未完成的事業(yè)。我們要繼承他未完成的事業(yè)。 We will succeed his undertaking that he has not finished. 她勸我別承擔那份工作。她勸我別承擔那份工作。 She discouraged me from undertaking the work. The operation of the letter of credit starts with the importer. He instructs his bank to issue an L/C in favor of the seller （以（以

15、為收益人）為收益人）for the amount of the purchase. Here the importer is called the applicant（開證（開證申請人）申請人）, or opener, principal etc., the bank that issues the credit is called the opening bank, the issuing bank or the establishing bank, (開證行開證行) and the exporter in whose favor the credit is opened is called

16、 the beneficiary（受益（受益人）人）. The opening bank sends the credit to its correspondent bank（往來行）（往來行）in the exporters country, who will, after examining（檢查）（檢查） the credit, advise （通（通知）知）the exporter of its receipt. Here the correspondent bank is called the advising bank（通知行）（通知行）. Applicant (Opener or

17、 Principal)申請人申請人: The person who instructs his bank to issue an L/C. (the importer) Opening bank (Issuing bank, Establishing bank)開開證行證行: The bank that issues the credit Beneficiary受益人受益人: The exporter in whose favor the credit is opened Correspondent band往來行、關(guān)系行往來行、關(guān)系行: The bank in the exporters c

18、ountry, which the opening bank sends the credit to it The exporter or beneficiary will make a careful examination（仔細檢查）（仔細檢查）of all the contents of the credit and will request the opener to make amendments(修改修改)to any discrepancies （不一（不一致）致）in the credit so as to ensure safe and timely payment. Som

19、etimes the exporter may require a confirmed letter of credit (保兌信用證保兌信用證) either because the credit amount is too large, or because he does not fully trust the opening bank. The bank that adds its confirmation（保（保兌）兌）to the credit is called the confirming bank which is undertaken（承擔）（承擔）either by th

20、e advising bank or another prime （big）bank. Discrepancies(=conflict , unconformity): a difference between conflicting facts or claims or opinions; an event that departs from expectations n. 不符；矛盾；相差不符；矛盾；相差 這種差異有大部分原因是歷史造成的。這種差異有大部分原因是歷史造成的。 Much of this discrepancy is to do with history. Confirming

21、 bank保兌行保兌行: The bank adds its confirmation to the credit When everything with the credit is in order, the exporter will prepare the relevant documents based on the credit and dispatch the goods to the importer. Then he will present the draft and the accompanying documents to the advising bank that

22、pays or accepts (承兌承兌) or negotiates（議付）（議付） the bill of exchange. The advising bank then also becomes the paying bank which acts as the agent of the opening bank and gets reimbursed（pay back） by the opening bank after paying the beneficiary. If a bank, either nominated （指定）（指定） by the opening bank

23、or at its own choice, buys the exporters draft submitted to it under a credit, it is called a negotiating bank (議議付行付行). The draft and the documents will then be sent to the opening bank for reimbursement（償（償付）付）. Advising bank通知行通知行: The bank in the exporters country, which advises the exporter the

24、 L/C, is received. Paying bank付款行付款行: The bank accepts or negotiates the bill of exchange. Nominate: propose as a candidate for some honor; put forward; nominate for appointment to an office; charge with a function; charge to be vt. 推薦；提名；任命；指定推薦；提名；任命；指定 他被提名為議員候選人。他被提名為議員候選人。 He was nominated for

25、the MP. (國會議員（國會議員（Member of Parliament）) 任命某人為總經(jīng)理任命某人為總經(jīng)理 to nominate someone as general manager 為會談確定時間和地點為會談確定時間和地點 to nominate the time and place for the talks Submit: refer for judgment or consideration; put before; refer to another person for decision or judgment; hand over formally vt. 使服從；主張

26、；呈遞使服從；主張；呈遞 vi. 提交；服從提交；服從 submit registration 提交登記表；提交注冊提交登記表；提交注冊 submit applications 提交申請?zhí)峤簧暾?我不會屈服于任何人。我不會屈服于任何人。 I will submit to nobody. 我已將動議提交給了眾議院。我已將動議提交給了眾議院。 I have submitted the motion to the House of Commons. Negotiating bank議付行議付行: The bank buys the exporters draft submitted to it un

27、der a credit. Letters of credit are varied in form, length, language, and stipulations. Generally speaking, however, they include the following contents: 1. The number of the credit and the place and time of its establishment. 2. The type of the credit. 3. The contract on which it is based. 4. The m

28、ajor parties relevant to the credit, such as the applicant, opening bank, beneficiary, advising bank. etc. 5. The amount or value of the credit. 6. The place and date on which the credit expires（失（失效）效）. Expire: lose validity; pass from physical life and lose all bodily attributes and functions nece

29、ssary to sustain life; expel air vi. 期滿；終止；死亡；呼氣期滿；終止；死亡；呼氣 vt. 呼出（空氣）呼出（空氣） 這些合同大部分在本月到期。這些合同大部分在本月到期。 Most of these contracts expire this month. 兩國之間的貿(mào)易協(xié)定明年期滿。兩國之間的貿(mào)易協(xié)定明年期滿。 The trade agreement between the two countries will expire next year. 7. The description of the goods including name of commo

30、dity, quantity, specifications, packing, unit price, price terms, etc. 8. Transportation clause（條款）（條款）including the port of shipment, the port of destination, the time of shipment, whether allowing partial shipments or transshipment（轉(zhuǎn)船）（轉(zhuǎn)船）. 9. Stipulations relating to the draft. 10. Stipulations c

31、oncerning the shipping documents required. Stipulation: (law) an agreement or concession made by parties in a judicial proceeding (or by their attorneys) relating to the business before the court; must be in writing unless they are part of the court record; an assumption on which rests the validity

32、or effect of something else; a restriction that is insisted upon as a condition for an agreement n. 規(guī)定；約定；條款；契約規(guī)定；約定；條款；契約 它的互惠只是一個附加的約定。它的互惠只是一個附加的約定。 Its reciprocity is merely an added stipulation. 11. Certain special clauses if any. e.g. restrictions on the carrying vessel（承運船只）（承運船只） and the rou

33、te. 12. Instructions to the negotiating bank. 13. The seal or signature of the opening bank. 14. Whether the credit follows “the uniform customs and practice for documentary credits”. Seal: fastener consisting of a resinous composition that is plastic when warm; used for sealing documents and parcel

34、s and letters; a device incised to make an impression; used to secure a closing or to authenticate documents n. 密封；印章；密封；印章； The seal of the Emperor 皇帝的玉璽皇帝的玉璽 The seal of the company 公司的印章公司的印章 The letter of credit provides security to both the exporter and the importer. However, it only assures pa

35、yment to the beneficiary provided the terms and conditions of the credit are fulfilled. It does not guarantee that the goods purchased will be those invoiced or shipped. It is stipulated in Article 4 of the uniform customs and practice for documentary credit that “in credit operations all parties co

36、ncerned deal in documents, and not in goods, services and/or other performance to which the documents may relate”. That is to say the banks are only concerned with the documents representing the goods instead of the underlying contracts. They have no legal obligation whether the goods comply with th

37、e contract. They will be considered as having fulfilled their responsibility so long as all the documents comply with the stipulations of the credit. Underlying: in the nature of something though not readily apparent; located beneath or below; being or involving basic facts or principles adj. 潛在的；根本

38、的；在下面的；優(yōu)先的潛在的；根本的；在下面的；優(yōu)先的 underlying asset 標的資產(chǎn)；基礎(chǔ)資產(chǎn)；相關(guān)標的資產(chǎn)；基礎(chǔ)資產(chǎn)；相關(guān)/指定資指定資產(chǎn)產(chǎn) underlying share 期權(quán)基礎(chǔ)股份期權(quán)基礎(chǔ)股份 If you have an underlying disorder, go to the doctor. 如果你有潛在的不適、紊亂，去看醫(yī)生。如果你有潛在的不適、紊亂，去看醫(yī)生。 Obligation: the social force that binds you to the courses of action demanded by that force; the stat

39、e of being obligated to do or pay something; a personal relation in which one is indebted for a service or favor n. 義務；職責；債務義務；職責；債務 別想逃避那項義務。別想逃避那項義務。 Dont try to duck out of the obligation. 但是我認為這是犯罪行為，我們每一個人都有義務但是我認為這是犯罪行為，我們每一個人都有義務制止它。制止它。 I say it is criminal, and we each have an obligation to

40、 stop it. The quality and quantity of merchandise shipped, although specified in the documents, ultimately depend on the seller who has manufactured, packaged, and arranged shipment for the goods. If the importer finds any problems with the goods, e.g. inferior quality or insufficient quantity, he h

41、as to contact or even take legal action against the exporter instead of the bank so long as the documents are “proper” on their face. Ultimately: adv. as the end result of a succession or process(=eventually , finally , basically , lastly) adv. 最后；根本；基本上最后；根本；基本上 The committee ultimately adopted his

42、 suggestions. 委員會最終采納了他的建議。委員會最終采納了他的建議。 Insufficient: adj. of a quantity not able to fulfill a need or requirement 不足的，不充足的不足的，不充足的 insufficient funds 存款不足存款不足 insufficient memory 內(nèi)存空間不足內(nèi)存空間不足 我們學校財力不足的困境現(xiàn)已暫時得到緩解。我們學校財力不足的困境現(xiàn)已暫時得到緩解。 Our school has been reprieved from insufficient financial resourc

43、es. Key points 1) The definition of the letter of credit 信用證的定義：信用證的定義：The credit is a letter issued by a bank at the request of the importer in which the bank promises to pay upon presentation of the relevant documents. 2）The unique and characteristic feature of the letter of credit信用證獨特的具有代表性的特征：信

44、用證獨特的具有代表性的特征： The former has the security to get paid provided (假如假如) he presents impeccable（沒有缺陷的）（沒有缺陷的）documents while the latter has the security to get the goods required through the documents he stipulates in the credit. This bilateral security is the unique and characteristic feature of the

45、letter of credit. 3）The relevant parties of the letter of credit and their roles in its process of operation 信用證的相關(guān)當事人及信用證的相關(guān)當事人及其在信用證業(yè)務中的作用其在信用證業(yè)務中的作用 The applicant The opening bank The advising bank The beneficiary The negotiating bank The confirming bank 4）The major contents of the letter of cred

46、it 信用證的主信用證的主要內(nèi)容：要內(nèi)容： 1）. The number of the credit and the place and time of its establishment. 2）. The type of the credit. 3）. The contract on which it is based. 4）. The major parties relevant to the credit, such as the applicant, opening bank, beneficiary, advising bank. etc. 5）. The amount or val

47、ue of the credit. 6）. The place and date on which the credit expires（失（失效）效）. 7）. The description of the goods including name of commodity, quantity, specifications, packing, unit price, price terms, etc. 8）. Transportation clause（條款）（條款）including the port of shipment, the port of destination, the t

48、ime of shipment, whether allowing partial shipments or transshipment（轉(zhuǎn)船）（轉(zhuǎn)船）. 9）. Stipulations relating to the draft. 10）. Stipulations concerning the shipping documents required. 11）. Certain special clauses if any. e.g. restrictions on the carrying vessel（承運船只）（承運船只） and the route. 12）. Instructio

49、ns to the negotiating bank. 13）. The seal or signature of the opening bank. 14）. Whether the credit follows “the uniform customs and practice for documentary credits”. 5）The documents being the only concern of the banks in credit operation 在信用證業(yè)務在信用證業(yè)務中銀行只關(guān)心單據(jù)中銀行只關(guān)心單據(jù)Answer the following questions:

50、1.What constitutes conflicting problems for international trade in respect of payment? Why? A: In international trade it is almost impossible to match payment with physical delivery of the goods, since the exporter prefers to get paid before releasing the goods and the importer prefers to gain contr

51、ol over the goods before paying the money. 2.What is the unique feature of the letter of credit? How does it offer security to the buyer and the seller? A: The bilateral security is the unique and characteristic feature of the letter of credit. The seller has the security to get paid provided he pre

52、sents impeccable documents while the buyer has the security to get the goods required through the documents he stipulates in the credit. 3.When was the modern letter of credit introduced and when did it have substantial development? What are the other names of the letter of credit? A: Modern credits

53、 were introduced in the second half of the 19th century and had substantial development after the First World War. “Letter of credit” is often shortened as L/C or L.C. and is sometimes referred to as “bankers commercial letter of credit”, “bankers credit”, “commercial credit” or simply “credit”. 4.W

54、hy does the exporter sometimes require a confirmed letter of credit? Who usually adds confirmation to the credit? A: Sometimes the exporter may require a confirmed letter of credit, either because the credit mount is too large, or because he does not fully trust the opening bank. The confirming bank

55、 usually adds its confirmation to the credit. 5.What are the main contents of a letter of credit? Mention these items (at least 10 items). A: (1)The number of the credit and the place and time of its establishment. (2)The type of the credit (3)The contract on which it is based. (4)The major parties

56、relevant to the credit, such as the applicant, opening bank, beneficiary, advising bank, etc. (5)The amount or value of the credit. (6)The place and date on which the credit expires. (7)The description of the goods including name of commodity, quantity, specifications, packing, unit price, price ter

57、ms, etc. 8)Transportation clause including the port of shipment, the port of destination, the time of shipment, whether allowing partial shipments or transshipment. (9)Stipulations relating to the draft. (10)Stipulations concerning the shipping documents required. (11)Certain special clauses if any,

58、 e.g. restrictions on the carrying vessel and the route. (12)Instructions to the negotiating bank. (13)The seal or signature of the opening bank. (14)Whether the credit follows “the uniform customs and practice for documentary credits”. 6.What are the banks concerned with in credit operations? Does

59、a credit guarantee that the goods invoiced are those purchased? A: In credit operations all parties concerned deal in documents, and not in goods, service and / or other performance to which the documents may relate. It does not guarantee that the goods purchased will be those invoiced or shipped. 7

60、.In case of problems with the quality or quantity of the goods, whom shall the buyer contact so long as the documents comply with the terms and conditions of the credit? A: If the importer (buyer) finds any problems with the goods, e.g. inferior quality or insufficient quantity, he has to contact or