How does the beneficiary(exporter)
get the amount specified in the Red Clause?
Does he have to make a negotiation?
Does any documented have to be presented?
How does the settlement between banks
take place for the red clause amount?
Red-Clause L/C claim,
Red-Clause L/C claim,
the red clause d/c means that the beneficiary's bank pays the beneficiary
at its own risk depending on an L/G
made to it's order,and the amount will be paid to the beneficiary with the local currency of the benificiay's country at an approximate rate to prepare the goods,and when he is done, he pays back same amount to his bank then negotiate documents presented inorder to get the amount of the d/c .
this is a rarely used d/c's, its important to differentiate between red clause d/c and advanced payment d/c .
at its own risk depending on an L/G
made to it's order,and the amount will be paid to the beneficiary with the local currency of the benificiay's country at an approximate rate to prepare the goods,and when he is done, he pays back same amount to his bank then negotiate documents presented inorder to get the amount of the d/c .
this is a rarely used d/c's, its important to differentiate between red clause d/c and advanced payment d/c .
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AbdulkaderBazara
- Posts: 256
- Joined: Fri Apr 05, 2019 5:15 pm
Red-Clause L/C claim,
A Red Clause Documentary Credit is a Documentary Credit with special condition incorporated into it that authorises the Confirming Bank or any other Nominated Bank to make advances to the Beneficiary before presentation of the documents (refer ICC Guide to Documentary Credit Operations for the UCP 500, Publication 515 page 49).
The bank who advanced the payment will deduct the principal amount plus the interest from the proceed due to the beneficiary; however, if the beneficiary fails to perform as to repay the advance payment and the due interest by presenting complying documents, the paying bank has the right to demand from the LC Issuing Bank who in turn has a similar right of recourse against the applicant.
[edited 3/23/01 11:35:41 AM]
The bank who advanced the payment will deduct the principal amount plus the interest from the proceed due to the beneficiary; however, if the beneficiary fails to perform as to repay the advance payment and the due interest by presenting complying documents, the paying bank has the right to demand from the LC Issuing Bank who in turn has a similar right of recourse against the applicant.
[edited 3/23/01 11:35:41 AM]
Red-Clause L/C claim,
The term 'Red Clause' adds mystery and confusion.
In practice, it just means that the credit will stipulate that:
a) a specific amount; or
b) an amount not to exceed x.
is available to the beneficiary against presentation of stipulated document (typically a receipt issued by the beneficiary or another named third party)
Often used as a means of pre-shimpment, procurement or advance freight payment facility.
I must admit that I do not encounter 'Red Clause Credits' very often whereas 10 years ago they were more common.
Vincent O'Brien
vob@obrico.com
[edited 4/12/01 9:49:39 PM]
In practice, it just means that the credit will stipulate that:
a) a specific amount; or
b) an amount not to exceed x.
is available to the beneficiary against presentation of stipulated document (typically a receipt issued by the beneficiary or another named third party)
Often used as a means of pre-shimpment, procurement or advance freight payment facility.
I must admit that I do not encounter 'Red Clause Credits' very often whereas 10 years ago they were more common.
Vincent O'Brien
vob@obrico.com
[edited 4/12/01 9:49:39 PM]
Red-Clause L/C claim,
As far as I understand, in Vietnam trade, red clause LC is sometimes asked for by the buyer. Whilst I was a director and general manager of a division of the Jardine Matheson Group (the Taipan company) in Hong Kong, I was also providing LC consultancy and training services to all divisions of the Group. I remember that on one occasion, I was consulted whether the Group should issue a red clause LC to a new seller from Vietnam and my answer at that time was No.
We have Green Clause LC, which is even more rare. Does anyone know the difference between a red clause LC and a green clause LC? I hope some of the subscribers of DC PRO can answer this. Otherwise I will provide the answer here after 30 days.
I am from www.tolee.com
[edited 12/2/01 10:08:36 PM]
We have Green Clause LC, which is even more rare. Does anyone know the difference between a red clause LC and a green clause LC? I hope some of the subscribers of DC PRO can answer this. Otherwise I will provide the answer here after 30 days.
I am from www.tolee.com
[edited 12/2/01 10:08:36 PM]
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RahimaRazzak
- Posts: 7
- Joined: Fri Apr 05, 2019 5:25 pm
Red-Clause L/C claim,
If I remember correctly a green clause credit in addition to the advance covered in the red clause l/c also requests for warehousing of the goods.