Red Clause Letter of Credit Sample

This article examines red clause letter of credit sample in swift format with detailed explanations for the trade practitioners.

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Letter of credit that carries a provision (traditionally written or typed in red ink) which allows a seller to draw up to a fixed sum from the issuing bank, in advance of the shipment can be defined as a red clause letter of credit.

Red clause letters of credit supply advance payments to the exporters before they actually ship the goods to the importers.

Exporters receive advance payments under red clause letters of credit mostly from the issuing banks inside the letters of credit.

It is also possible that the advance payments are payable outside of the letters of credit from the importers to the exporters.

Normally, the issuing banks make the advance payment under red clause letters of credit against presentation of advance payment guarantees issued by the bankers of the exporters, guaranteeing a refund in the event of failure to ship under the credit.

———————————– Instance Type and Transmission —————————-
Original received from SWIFT
Priority/Delivery : Normal
Message Output Reference : 1225 121016XXXXXXXXX5657939061
Correspondent Input Reference : 1225 121016XXXXXXXXX1178375172

—————————————- Message Header —————————————–
Swift OUTPUT FIN 700 Issue of a Documentary Credit
Sender : ASIATRISXXX
Receiver : PCBCCNBJXXX
————————— Message Text ———————————-
27: Sequence of Total
1/1

40A: Form of Documentary Credit
IRREVOCABLE

20: Documentary Credit Number
ASIAIM00004050

31C: Date of Issue
130722

40E: Applicable Rules
UCP LATEST VERSION

31D: Date and Place of Expiry
131230-TURKEY

50: Applicant
ASIA BANK OF TURKEY TAS
BUYUK HAN MAH. ISMAIL HAKKI BEY
CAD. NO:20 34500
SISLI,ISTANBUL/TURKEY

59: Beneficiary – Name & Address
NINGBO PLASTIC MACHINERY CO., LTD.
PLS SEE FIELD 47A ITEM 7 FOR ADDRESS DETAILS
32B: Currency Code, Amount
Currency : USD (US DOLLAR)
Amount : #327.000,00#

39B: Maximum Credit Amount
NOT EXCEEDING

41A: Available With…By… – BIC
ASIATRISXXX
ASIA BANK OF TURKEY TAS BUYUK HAN MAH. ISMAIL HAKKI BEY CAD. NO:20 34500
SISLI,ISTANBUL/TURKEY
BY MIXED PYMT

43P: Partial Shipments
NOT ALLOWED

43T: Transhipment
ALLOWED

44E: Port of Loading/Airport of Departure
ANY CHINESE PORT

44F: Port of Discharge/Airport of Destination
HAYDARPASA PORT ISTANBUL

44C: Latest Date of Shipment
131209

45A: Description of Goods &/or Services
NEW PLASTIC CUP MAKING LINE QTY:1 SET U/P: USD 327.000 FOR TOTAL AMOUNT: USD 327.000,00 AS PER BENEFICIARY’S PROFORMA INVOICE REF NO: NB130522 DD:04.07.2013
INCOTERMS 2010: CIF HAYDARPASA ISTANBUL TURKEY

46A: Documents Required

  • DULY SIGNED COMMERCIAL INVOICE IN 2 ORIGINALS AND 3 COPIES CERTIFYING IN STRICT CONFORMITY WITH THE BENEFICIARY’S PROFORMA INVOICE REF NO: LL130522 DD:04.07.2013 AND SHOWING QUANTITY, DESCRIPTION , ALSO STATING FOB VALUE OF THE GOODS FREIGHT AND INSURANCE SEPARATELY.
  • CLEAN ON BOARD B/L IN 3/3 ORGS. AND 3 N/N COPIES ISSUED TO THE ORDER OF ISSUING BANK NOTIFY APPLICANT,MARKED: ‘FREIGHT PREPAID’.
  • PACKING LIST IN 2 ORG.S AND 2 COPIES.
  • BENEFICIARY’S CERTIFICATE 1 ORG. STATING THAT SHIPMENT DETAILS INCLUDING DATE AND PLACE OF LOADING,NAME AGE,NATIONALITY,IMO NUMBER OF THE VESSEL,VALUE OF THE GOODS, GROSS AND NET WEIGHTS OF THE GOODS AND THE REF.NO OF THE L/C HAVE BEEN SENT TO OUR BANK’S FAX NO:+90 212 600 50 10 WITHIN 2 DAYS AFTER SHIPMENT DATE FOR INFORMATION PURPOSES.(FAX REPORT AND SHIPMENT DETAILS HAVE BEEN ATTACHED TO THIS DOC.)
  • CERTIFICATE BY BENEFICIARY STATING THAT ‘CE’MARK HAS BEEN LABELLED ON PACKAGES OF THE GOODS AND TECHNICAL DOCUMENTS IN STRICT CONFORMITY CONCERNING LEGISLATION
  • FULL SET INSURANCE POLICY ISSUED TO THE ORDER OF ISSUING BANK FOR FULL CIF VALUE PLUS 10 PERCENT AND STATING THE NAME, PHONE AND FAX NUMBERS OF A CLAIMS SETTLING AGENT IN TURKIYE AND CLAIMS PAYABLE IN TURKIYE COVERING THE FOLLOWING RISKS FROM WAREHOUSE TO WAREHOUSE:
    +INSTITUTE CARGO CLAUSES (A)
    +INSTITUTE WAR CLAUSES (CARGO)
    +INSTITUTE STRIKE CLAUSES (CARGO)
    +RIOTS AND CIVIL COMMOTIONS,
    ALSO INSURANCE TO CERTIFY THAT COVER IS NOT SUBJECT TO A FRANCHISE OR AN EXCESS (DEDUCTIBLE).
  • CERTIFICATE OF ORIGIN IN 1 ORG. AND 1 COPY LEGALIZED BY THE LOCAL CHAMBER OF COMMERCE ATTESTING THAT GOODS ARE CHINA ORIGIN.

47A: Additional Conditions

  • ALL DOCUMENTS MUST BEAR OUR L/C REF.
  • IN CASE OF PRESENTATION OF THE DOCUMENTS WITH DISCREPANCIES, USD 100,00 WILL BE DEDUCTED FROM THE PROCEEDS AS AN ADDITIONAL PROCESS FEE.
  • DOCUMENTS ISSUED BEFORE L/C OPENING DATE NOT ACCEPTABLE.
  • PAYMENTS TO BENEFICIARY UNDER RESERVE AND ANY KIND OF GUARANTEE ARE NOT ACCEPTABLE
  • ALL DOCS MUST BE ISSUED OR FILLED IN ENGLISH
  • BENEFICIARY’S ADDRESS: DEVELOPED AREA OF NINGBO ECONOMIC DEVELOPMENT ZONE NINGBO CITY CHINA

71B: Charges
ALL BANKING CHARGES AND COMMISSIONS OUTSIDE OF TURKEY ARE FOR BENEFICIARY’S ACCOUNT.

48: Period for Presentation
21 DAYS AFTER SHIPMENT DATE BUT WITHIN CREDIT VALIDITY.

49: Confirmation Instructions
WITHOUT

78: Instruction to Paying/Accepting/Negotiating Bank

  • 30 PCT OF L/C AMOUNT SHALL BE PAID IN ADVANCE UPON RECEIVING ADVANCE PAYMENT GUARANTEE,
  • 70 PCT OF L/C AMOUNT SHALL BE PAID UPON RECEIPT OF CREDIT CONFORM DOCS.
  • PLS ADVISE US THE REMITTANCE OF THE DOCS. BY MT 754 MSG. QUOTING OUR REF.

72: Sender To Receiver Information

  • PLS SEND THE DOCS TO FOLLOWING ADDRESS BY DHL IN ONE LOT: ASIA BANK OF TURKEY TAS BUYUK HAN MAH. ISMAIL HAKKI BEY CAD. NO:20 34500 SISLI,ISTANBUL/TURKEY
    ———————– Message Trailer ——————————
    {MAC: 00000000}
    {CHK: XXXXXXXX}