Is Red Clause LC A Mixed Payment LC?

[gegeeee]

Guys,

If i have Red clasue LC, where advance pmt in within the original LC.

Should i structure LC available by mixed payment?

It is mandatory or can i just structure LC available by def pmt and in additional conditions say that advance is paid within the original lc at sight after presentation of xxxxxxxxxxxxxxxxx document.

[picant]

Hi Pal,

IMHO, it depends on the Red Clause facility. However a simple advance does not make the l/c available by mixed payment.
On receipt of prescribed documents you will advance the agreed sum, then on presentation of full documents for full amount you will avail, the l/c reimbursing the advance.
Other comments appreciated
Ciao

[gegeeee]

Dear Picant,

what do you mean in word "simple advance" , in my case advance is within lc. beneficiary has to present certificate of beneficiay and after this i (Bank) pay advance being 20% of Total lc amount. 80% i pay after 90 from b/l date against complying presentation.

[picant]

Hi Pal,l/c remain valid for full amount in the sec

i told you that all depends on the Red Clause wording in l/c. If the advance is made against a receipt and an undertaking to ship the goods within the l/c terms, issued by the beneficiary or an invoice for said amount etc.
In the first case is an advance, in the second is an advanced payment., The first case is a red claused l/c , the second is a mixed payment. In the first case the l/ amount will remain in full, in the second one only for the balance.
I dont know with which funds you will effec the advance, I think with issuing bank's fund.
Let me know, it is not easy to argue with you, without having documents on hands.
Other comments appreciated
Ciao

[gegeeee]

Dear Picant,

Thanks for your protmpt reply and attention.

Funds are made by issuing bank. I guess it will be mixed pmt.

Thanks ina advance.

[gegeeee]

Picant,

Actually i cant differ red clause Lc and Lc where advance is made within it. I thought if advance is made within LC with issuing banks funds it is a Red clause.

If you give me a little examples i ll be so much appreciated.

Thanks in advance

[abrar]

Best option would be to indicate that LC is available by deferred payment and mention the advance separately.

So :

Field 41A : Available with XXXXX Bank BY DEF PAYMENT

Field 42P : Deferred payment details ( 90 days b/l date)

Field 47A : 20% of LC value payable against beneficiary's "simple receipt" and 80% ppayable against documents detailed under filed 46A.

[gegeeee]

Thank you Abrar.