Letter of credit opened by the buyer for the following reasons:
1) the use of certificates is applied for by the buyer to open, that is to say, the buyer is the applicant of the letter of credit.
②When the buyer wants to buy goods from abroad, it is necessary to go to the bank to open a letter of credit, the foreign seller receives the letter of credit according to the requirements of the letter of credit shipment.
③The seller is the proceeds of the letter of credit, is received by the bank notification of the letter of credit, preparation, shipment, customs clearance, shipment, to the bank to pay the bill, and then collect through the bank.
Parties can refer to the model text of various types of contracts to conclude contracts. The process of letter of credit operation is briefly described as follows:
1. The buyer and seller stipulate in the trade contract to use the documentary letter of credit payment.
2. The buyer notifies the local bank (issuing bank) to open a letter of credit in favor of the seller.
3. The issuing bank requests another bank to notify or confirm the letter of credit.
4. The advising bank informs the seller that the letter of credit has been opened.
5. After the seller receives the letter of credit and ensures that it can fulfill the conditions set forth in the letter of credit, it ships the goods.
6. The seller submits the documents to the designated bank.
The bank may be the issuing bank, or the payment, acceptance or negotiation bank specified in the letter of credit.
7. The bank reviews the documents against the letter of credit.
If the documents comply with the provisions of the letter of credit, the bank will make payment, acceptance or negotiation in accordance with the provisions of the letter of credit.
8. A bank other than the issuing bank sends the documents to the issuing bank.
9. The issuing bank, after examining the documents for accuracy, reimburses the bank that has paid, accepted or negotiated in accordance with the letter of credit in the form agreed upon in advance.
10. The issuing bank delivers the documents after the buyer pays, and then the buyer picks up the goods against the documents.
Legal basis:
Article 44 of the Law of the People's Republic of China on Commercial Banks
Commercial banks shall handle the acceptance of bills, exchange, entrusted collection and other settlement business, shall be honored in accordance with the stipulated period of time, payment and receipt of the accounts, and shall not be pressed, or in violation of the provisions of the returned checks. Provisions relating to the period of honoring, receiving and crediting shall be published.
Article 45 of the Law of the People's Republic of China on Commercial Banks
Commercial banks issuing financial bonds or borrowing money outside the country shall report for approval in accordance with the provisions of laws and administrative regulations.