Documentary Credit and Bank Guarantee in International Trade
Multiple choice: 1. D 2. TFTFT 3. CE 4. E 5. ACD 6. CD 7.B D 8. A 9. BC 10. AC
The date of delivery: 2014 dec 21
The loading port: Port of Mar del Plata, Argentina
The port of arrival/destination: Port of Rotterdam
Promissory note (P/N) : 5 200 000*0,25= 1 300 000
I, Ministry Of Agriculture of Czech Republic promise to pay against this promissory note to the order of Productos de Industria Meccanica 1 300 000 USD, ( in figures) one million and three hundred thousand us dolars on the 20th of December 2014. bank acc. of the Ministry of Agriculture of Czech Republic at UniCredit Bank Prague.
Prague 18th Sept. 2014 Ministry of Agriculture of Czech Republic
Per aval: UniCredit Bank
Endorsement
endorsee, endorser,
HSBC Holding plc, Argentina, Buenos aires Productos deIndustria Meccanica,Cordoba,Argentina
Computation of the Discounting
(1 300 000*28 *0,012 ) / 365 = 1196.7 USD interest
1. The required documents are: commercial invoice, certificate of origin, packing list, bill of lading(clean,full set, blank endoresed), insurance policy(blanked endoresed)
2. Who is the issuing bank of the documentary credit? buyer’s bank-UniCredit Bank Prague
3. Who is the applicant in the documentary credit? buyer-Ministry of Agriculture of Czech Republic
4. Who are the contracting parties in the contract of reinbursment? buyer+issuing bank
5. What securities could be involved in the contract of reinbursment? Bill of exchange, promissory note
6. What is a documentary credit by its legal nature? It’s a contract which is a subject to the civil law and to the icc usage ucp 600. Including two contracting parties: the issuing bank and the beneficiary ( supplier)
7. What duties should be performed by the advising bank? The advising bank verifies the authentity of the doc credit and forwards it to the beneficiary.
What is a difference between a letter of credit and the documentary credit? Letter of credit always include the promissory note
8. Which type of documentary credit include two documentary credits as banking undertaking? Please name the actors. Irrevocable Doc. Credit. Actors: Issuing bank, Advising Bank, Beneficiary(seller)
9. What does negotiation in a documentary credit mean? Before deadline of the payment after the examination and acceptence of docs a bank may advance payment to thte beneficiary. Freely negotiable doc credit: any bank may advance if the issuing bank is credit worthy.
10. What is a nomination? Contract of appointment between issuing bank and an involved bank. Types: nomination for advising,for conformation, for payment
11. What is a techincal and legal base of banks cooperation? Technical base: Swift system/electronic massage transfer. Legal: Correspondent banking relationship and ucp 600
What law is to be applied to the ddocumentary credit? The country where the issuing bank is located, laws of Czech Republic
12. Who pays the banking charges of the documentary credit? buyer-ministry of agriculture of czech republic
13. Please define the situation where the banks are empowered to dishonor! Please apply the principles. Not precise specification of place of amount. Evident fraud in doc credit. Moratorium discrepency between docs sent by beneficiary, missing documents, late submission of documents.
14. Why should the documents of title be blank endoresed? Since they serve as securities in the hands of the issuing bank, so they are blank endoresed not to name the bank as owner.
15. Who is the guarantor? Buyer’s bank-Unicredit Bank Prague
16. Who instructs the bank for opening the guarantee? bidder-Productos de Industria Meccanica
17. What law is to be applied to the guarantee? State law of the guarantor
18. Who pays the banking charges of the guarantee? The beneficiary
19. Please put the right wordings of the principle of independence! The banks are dealing with documents and have no regard on the real transaction.
20. What law is to be applied to the promissory note? Place of insurance- Czech law
21. What does abstract nature of B/E mean? It means that B/E is not drawn to special goods.
What does the principle „ with recourse” mean? The bank(HSBC HOLDING) has the right to reclaim the price paid when and of the main obligers
22. Please name all the actors of a P/N! Buyer,seller, collecting bank, remmiting bank
23. The argentinian seller has no money….
a, with recourse?
b, without recourse?
24. Please list the post shipment construction!
25. The Bill of Lading evidence that the loading ended 2 days…
26. If the applicant were ready to accept…. As the documentory credit is independent,irrevocable tool it is independent of the underlying transaction therefor the bank should obey.
27. Which payment method is likely to be used where the documents are not in full complience? Payment at sight
28. Who is going to pay in this new method of payment? Buyer
29. What duty will the bank of the buyer have in this new situation?
a, Give him the documents that are in full complience
b, Issue a new document of title to the goods for the buyer
Application form for the issuance of a Documentary Credit
Applicant: Ministry of Agriculture of Czech Republic
UniCredit Bank, Prague
To (bank of beneficiary) HSBC Holding plc, Argentina, Buenos aires
40A Form of documentary credit: Irrevocable
31D Date and place of expiry: Prague 2014 sept 18
HSBC Holding plc
59 Beneficiary: Productos deIndustria Meccanica,Cordoba,Argentina
32B Currency code and amount: US Dollars 3 900 000
39 Credit amount specification: Not exceeding
41D Available with: HSBC Holding plc
Available by Deferred payment– 90 days
, date of shipment
43P Partial shipment : not allowed
43T Transhipment : not allowed
44E Port of loading: Port of Mar del Plata
44F Port of discharge: Port of Rotterdam
44C Latest date of shipment –
Trade terms (delivery terms) with place : CIF
45A Description of goods and/or services: Electronic Rangefinders
46A Documents required: Signed commerciel invoice-3copies
Packing list-2 copies
Certificate of Origin
Chamber of commerce
Full set of original bill of lading Insurance policy
Clean and board
Made out to order and blank endoresed
Institute cargo clauses „all risks”
Marked freight, prepaid and norify
Stipulating the claims….
47A Additional conditions: 71B: DC Commissions and charges
Presenting banks must send documents to UniCredit Bank All commisions and charges are for the applicants account
In two lots by registered airmail
Further conditions/remarks: Issue a revolving DOC credit
48 Period for presentation: Documents to be presented within 21 days
49 This DC : Is not to be confirmed by the bank of beneficiary
uj dokumentum
Rotterdam 2014 sept 25 Appl: Productos deIndustria Meccanica
Cordoba
Order to issue a bank guarantee
HSBC Holding plc Productos deIndustria Meccanica
Bank guarantee currency: USD 550 000 10%of total price Expiry date: 2014 sept 25
Purpose of guarantee Performance, english
Legal form: guarantee as per icc urdg
Underlying transaction: public procurement procedur for electronic rangefinders
Beneficiary: Ministry of agriculture of czech republic Czech republic
Involvment of third bank: no
Handing over of original guarantee to: beneficiary
Guarantee commission: commission and charges Productos de Industria Meccanica
Rotterdam Productos deIndustria Meccanica
uj dokumentum
UniCredit Bank Productos deIndustria Meccanica
Presentation of documents
Documentary credit-Unicredit bank: full
Transport documents: Bill of Lading
Other documents: Commercial invoice, insurance policy/certificate, certificate of origin, weight lsit/packing list
The utilozed amount of: to be credited to our account
Rotterdam, 2015.01.21 Productos deIndustria Meccanica