Comparison between the most popular letter of cred

[L/C] - Comparison between L/C with recourse and L/C without recourse

(I) with recourse letter of credit, "recover" in its English representation means "recourse" and "request repayment". In order to accurately express its meaning, it is often expressed in the text of right of recourse

a letter of credit with recourse must contain the words "right of recourse" in the letter of credit. However, in practice, all letters of credit without recourse are letters of credit with recourse

to study and apply the function of letter of credit with recourse, we must consider the following two aspects, namely, refusal and recourse. If there is no refusal, there will be no recourse

refuse to honor means that the payer refuses to pay (refer to honor by non payment) or refuses to accept (refer to honor the door type Brinell hardness tester meets the 3-axis x, y, z direction conditioning ur by non acceptance)

when the bill is formally presented for payment or acceptance, the drawee shall exercise the right of recourse when he refuses to pay or accept

(II) who to exercise the right of recourse 1 The holder exercises the right of recourse against the drawer:

(1) in international trade, the recourse letter of credit is used as the payment method, and the documentary bill is used as the payment means to require negotiation. After the negotiating bank negotiates the documentary bill, the negotiating bank has become the holder of the documentary bill. However, the negotiating bank is not the payer but only the advance payer

if the negotiating bank holding the bill is refused by the paying bank or importer, in this case, the bank paying the advance has the right to exercise the right of recourse against the drawer or the beneficiary to recover the advance

(2) if the negotiating bank holds a sight draft, it shall not be greater than 0.5% of the indicated value of the load within the period of validity; When the paying bank or importer refuses to pay on the ground of inconsistent documents, the negotiating bank may exercise the right of recourse to recover the advance from the drawer

(3) after the negotiating bank accepts and negotiates the documentary bill under the usance letter of credit, the negotiating bank has only one usance bill of exchange, and other documents have been held by the importer, and the goods are picked up with vouchers. At this time, the document and the bill have been separated, so there is no discrepancy between the documents. If the usance bill is dishonoured by the drawee, the negotiating bank of the advance may exercise the right of recourse against the drawer or endorser (called the former party) to recover the advance payment

2. The negotiating bank exercises the right of recourse against other banks:

(1) the exporter issues documentary bills in accordance with the terms specified in the letter of credit. The same set of documentary bills passes through one or two. If they are negotiated successively by the transmitting bank and the re negotiating bank, the last negotiating bank will open a straight-line co value internal gear pump. Characteristics: in the hydraulic industry, it is known as the never worn oil pump letter or the designated paying bank. If it is refused to pay when requesting repayment of the advance, Then the last bank can exercise the right of recourse to its former bank to recover the advance

(2) if for some reason, the issuing bank (i.e. the paying bank) must entrust the paying bank or the reimbursement bank to repay its advance to the negotiating bank. However, the paying bank and the reimbursing bank only accept the entrustment to handle the business, and review the documentary bill, and do not bear the responsibility

if the issuing bank and paying bank finds that the documents are inconsistent with the bill or finds problems after receiving the documentary bill, it will refuse to pay. At this time, the paying bank may exercise the right of recourse against the negotiating bank to recover the amount repaid to the bank on its behalf

3. The negotiating bank may also exercise the right of recourse in the following cases: 1 The payer is missing, and the ticket holder cannot find the payer; 2. The paying bank goes bankrupt, and the payer goes bankrupt or dies; 3. The payer disregards the business reputation or engages in fraud

if the above situation occurs, it will be deemed as refusal of payment, and the negotiation bank or the holder should recover the advance from who should exercise the right of recourse. In case of disputes, applicable legal means can be taken to recover the advance

(III) where a non recourse letter of credit is adopted, the letter of credit should contain the words "without recourse" for clarity

a non recourse letter of credit refers to a documentary bill issued by an exporter with the words "draw without recourse". If it is dishonoured, the holder or the negotiating bank shall not exercise the right of recourse against the drawer or endorser. In other words, the negotiating bank shall not require the drawer to refund the amount advanced, and the losses incurred shall be borne by the negotiating bank only

the commercial and banking circles in various countries or regions have different understandings and practices on the issuance of documentary bills with "exemption from the drawer" by non recourse letters of credit for three reasons:

first, the documentary draft issued under letters of credit and the draft used by non letter of credit methods stipulated in the contract are used as payment means. The two are confused, resulting in different understandings and practices

second, all countries have promulgated their own bill laws. Generally speaking, the terms and contents are generally the same

generally speaking, the bill of exchange act. 1882 of Britain is referred to or quoted in the bill laws promulgated by various countries, and there are differences and differences in the definition of bill. For example: -- item 2 of Article 9 of the bill law of Japan stipulates that bills without recourse are invalid, and states that bills without recourse are not allowed

--- the Bank of England, which is located in Asian countries, is called eastern bank. The understanding of irrevocable and non recourse letter of credit by banks in other countries is that it has no recourse only to the drawer. They believe that the title "irrevocable and non recourse" is only used for eye-catching purposes

--- in continental Europe, Germany, Italy and other countries, with non recourse letters of credit as the mode of delivery, only documents are required, not bills of exchange. They believe that the contents listed in the documents have met the requirements of payment, so this is different from other countries. There are different practices in some African countries, which should be paid attention to in practice