Dear Pals,
A proforma invoice includes following payment term:
"30% in advance before LC open and rest 70% in LC at sight"
Can we consider it as "Red Clause LC"?
Red Clause LC
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Siddhanjan
- Posts: 12
- Joined: Sat Jun 23, 2018 9:08 pm
- First Name: Siddhanjan
- Last Name: Mecwan
- Organization: XYZ Bank Ltd., Nepal
- Filter: Two Plus Two =: 4
- Location: Kathmandu
-
picant
- Posts: 2026
- Joined: Wed Aug 20, 2008 1:49 pm
Re: Red Clause LC
Hi Pal,
no, the 30% will be paid outside the l/c. Red Clause means that the l/c will be open for 100% of PF o contract value and beneficiary may obtain a certain percentage by presenting a document stating that the advance will be used to buy(part) goods that will be shipped timely.The main problem is in which way the nominated bank will get funds to advance to l/c beneficiary and payment of interests.
In your case an advance payment bond may be required by the buyer!
Other comments appreciated.
Ciao
no, the 30% will be paid outside the l/c. Red Clause means that the l/c will be open for 100% of PF o contract value and beneficiary may obtain a certain percentage by presenting a document stating that the advance will be used to buy(part) goods that will be shipped timely.The main problem is in which way the nominated bank will get funds to advance to l/c beneficiary and payment of interests.
In your case an advance payment bond may be required by the buyer!
Other comments appreciated.
Ciao
-
Siddhanjan
- Posts: 12
- Joined: Sat Jun 23, 2018 9:08 pm
- First Name: Siddhanjan
- Last Name: Mecwan
- Organization: XYZ Bank Ltd., Nepal
- Filter: Two Plus Two =: 4
- Location: Kathmandu
Re: Red Clause LC
Thank you so much Picant!