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Responsibilities and Liabilities of Parties
Responsibilities and Liabilities of Parties
Applicant (Importer)
Beneficiary (Exporter)
different
country
Advising bank
The advising bank advises the credit
Also known as the “correspondent” bank
Can be a nominated bank and/or a confirming bank
Applicant
Since the letter is based on the sale contract between
the exporter and importer , the letter has a duty to the
exporter to see that the credit opened is as per the
terms of the sale contract.
A letter of credit is not regarded as absolute payments
unless the exporter stipulates expressly
The obligation between the importer and the issuing
bank are governed by the application –cum- agreement
submitted by the importer to the bank. (Article 5)
The issuing bank utilizes the services of another bank or bank for
the purpose of giving effect to the instructions of the applicant
does so for the account and at the risk of the applicant. The issuing
bank is not liable if the instructions it transmits are not carried out.
( Article 21(a) and (b))
The importer has to pay the charges including commission’s fees,
costs and expenses incurred by the issuing bank in connection with
the letter of credit.( Article 18))
The applicant is liable to indemnify the banks against all obligations
and responsibilities imposed by foreign laws and usage (Articles
18(d))
The applicant is liable to indemnify the banks
against all obligations and responsibilities imposed
by foreign laws and usage (Articles 18(d))
Under the application -cum-agreement for opening
the credit, the applicant agrees that till he
reimburses the issuing bank the goods that are
covered by the documents shall stand charged to
the bank
Nominated bank (intermediary bank )
Advisory bank
Conforming bank
Negotiating bank
Accepting bank
Paying bank
Reimbursing bank
Thank you