Details on Parties and Procedures
•
The Advising (Seller's) Bank
•
If the advising bank is simply "advising
the credit," it is
under no obligation or commitment to make payment, and
it will so advise the seller. In some cases the advising bank
confirms (adds its guarantee to pay) the seller.
In this case it
becomes the confirming bank.
•
If the advising bank confirms the credit it must pay without
recourse to the seller when the documents are presented,
provided they are in order and the credit requirements are
met.
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Details on Parties and Procedures
•
Seller/Exporter/Beneficiary
•
In addition to assessing the reputation of the buyer prior to
signing
a sales contract, the seller should also assess the
reputation of the buyer's (issuing) bank before agreeing to
rely upon that bank for payment in a documentary credit. It
is not unknown for sellers to receive fictitious documentary
credits from non-existent banks and to realize their mistake
after shipment.
•
The seller must carefully review all conditions the buyer has
stipulated in the documentary credit.
If the seller cannot
comply with one or more of the provisions, or if the terms
of the credit are not in accordance with those of the
contract, the buyer should
be notified immediately and
asked to make an amendment to the credit.
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