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  • SSNS-Spring 20 - Global Sourcing-Legal Documentation

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    Berjees Shaikh
    15 views8 pages
    The document discusses letters of credit, which are guarantees of payment issued by banks. It defines letters of credit and notes they are governed by UCP 600. The document lists different types of letters of credit and parties involved, including applicants, opening banks, advising/negotiating banks, beneficiaries, and confirming banks. It also lists various legal trade documentation used in international transactions, such as purchase orders, invoices, bills of lading, and certificates of origin. Finally, it outlines risks in international sourcing such as credit, quality, logistics, political, and exchange rate risks, and strategies for managing these risks, like using guarantees, usance letters of credit, and third-party inspections.

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    SSNS-Spring 20- Global Sourcing-Legal Documentation (1)

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    The document discusses letters of credit, which are guarantees of payment issued by banks. It defines letters of credit and notes they are governed by UCP 600. The document lists different types of letters of credit and parties involved, including applicants, opening banks, advising/negotiating banks, beneficiaries, and confirming banks. It also lists various legal trade documentation used in international transactions, such as purchase orders, invoices, bills of lading, and certificates of origin. Finally, it outlines risks in international sourcing such as credit, quality, logistics, political, and exchange rate risks, and strategies for managing these risks, like using guarantees, usance letters of credit, and third-party inspections.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    15 views8 pages

    SSNS-Spring 20 - Global Sourcing-Legal Documentation

    Uploaded by

    Berjees Shaikh
    The document discusses letters of credit, which are guarantees of payment issued by banks. It defines letters of credit and notes they are governed by UCP 600. The document lists different types of letters of credit and parties involved, including applicants, opening banks, advising/negotiating banks, beneficiaries, and confirming banks. It also lists various legal trade documentation used in international transactions, such as purchase orders, invoices, bills of lading, and certificates of origin. Finally, it outlines risks in international sourcing such as credit, quality, logistics, political, and exchange rate risks, and strategies for managing these risks, like using guarantees, usance letters of credit, and third-party inspections.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    Strategic Sourcing & Negotiation Skills

    Global Sourcing-Legal Documentation-LC


    Strategic Sourcing & Negotiation Skill by Sheikh Irfan
    (smikhi@yahoo.com)
    Global Sourcing-Letters of Credit

    A. Definition: Guarantee of payment by one bank to another

    B. Governance UCP 600-6th Revision


    C. Types
    D. Parties

    E. Legal Documentation

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    Letters of Credit… contd…

    Types
    • Irrevocable

    • Confirmed
    • Sight

    • Usance

    • Standby (Inland Letter of Credit)


    • Transferable

    • Back to back

    • Revolving
    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)
    Letters of Credit… contd..

    Parties
    • The Applicant
    • Opening Bank/Applicant Bank
    • Correspondent Bank
    • Advising Bank/Negotiating Bank
    • Beneficiary
    • Confirming Bank

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    Legal Trade Documentation
    • Purchase Order/Contract
    • Proforma Invoice (PFI)
    • Letter of Credit (LC)
    • Commercial Invoice
    • Bill of Lading/Airway Bill
    • Packing List
    • Bill of Exchange
    • Quality Documents/Compliance documents
    • Certificate of Origin
    • Courier Receipt
    • Shipment Advice to Insurance Co.

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    Risks in International Sourcing
    Credit Risk (Risks related to LC)
    Fraud
    Regulatory
    Legal
    Force Majeure
    Failure of Bank
    Failure of Importer/Exporter
    Non delivery
    Short Shipment
    Early or late shipment
    Poor Quality Risk
    Logistics Risks (shipping space, road conditions, weather conditions)
    Political Risks
    Exchange Risks
    Damage and Loss

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    6
    Risk Management in International Purchasing
    1. Guarantee
    2. Usance LC
    3. Importer’s visit before awarding Order
    4. Supplier’s reference list/project list
    5. Some tests certificate being part of shipping documents
    6. Importers visit before shipment
    7. Third party inspection
    8. Quality Certificates
    9. Test in presence of Importer’s representatives
    10. Insurance from a reputable Company

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    7
    Global Sourcing-Sequence of Activities

    IMPORTS (from Pakistan) EXPORTS (from abroad)

    1. Issuance of PO/Contract 2. Checking of PO/Contract


    4. Checking of PFI
    3. Issuance of Proforma Invoice
    5. Opening of Letter of Credit **
    6. Receipt of LC and Checking
    8(b) Follow up of Order
    7. Request for Amendment, if any
    12. Receipt of Non Negotiable 8(a). Start of Production/Processing
    Documents and their checking and
    handing over to Clearing Agent 9. Preparation of Export documents
    13. . Following up of arrival of Ship 10. Dispatch of Cargo
    or flight and Original Documents 11. Dispatch of Shipping documents
    14. Retirement of Documents from 15. Receipt of Export Proceeds
    Bank. 19. Insurance issues in case of CIF
    16 Customs Clearance or CIP
    17. Dispatch of Cargo from Port. 20. Close
    18. Receipt of Cargo at Importers
    premises and insurance survey

    Strategic Sourcing & Negotiation Skill by Sheikh Irfan (smikhi@yahoo.com)


    8

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