چکیده:
Letter of Credit is an international payment instrument whereby the issuing bank
undertakes to pay the beneficiary, against presentation of certain stipulated documents,
according to the conditions of the Letter of Credit. Discounting of LC for the short-term
financing of the seller, due to the independent and irrevocable undertaking of the bank to
make payment, is prevalent. Beneficiary gets the amount of the credit immediately (after
discount rate deduction) in consideration of the assignment of the credit in discounting
practice. Now, the main question is: how will the assignment of rights and proceeds under
the Letter of Credit be executable and what will be its consequences? Hence, by surveying
different methods of assignment of rights in accordance with LC, we study discounting
Acceptance and Deferred Payment LCs as two kinds of deferred LCs. In discounting
practices of LCs, if a fraud being discovered after the discounting transaction but before
the payment due date, the discounting bank would be able to recover payment from
issuing bank or confirming bank. According to our analysis, the most promising way for
the assignment of rights and reducing the risk of discounting for the discounting bank is
"Negotiation" of LC. Acceptance LC makes a favorable opportunity for discounting
purposes because it includes bill of exchange as a negotiable instrument, and there is an
organized secondary market for Acceptances.
خلاصه ماشینی:
Discounting of Letters of Credit; A Legal Analysis Letter of Credit is an international payment instrument whereby the issuing bank undertakes to pay the beneficiary, against presentation of certain stipulated documents, according to the conditions of the Letter of Credit.
Keywords : Assignment, Negotiation, Deferred, Acceptance, Fraud JEL Classification: K22, G32 1 Introduction Letter of Credit is an international payment instrument whereby the issuing bank undertakes to pay the beneficiary, against presentation of certain stipulated documents, according to the conditions of the Letter of Credit.
(Berger, 2004) Considering the above definition, there are two significant subjects regarding the legal dimensions of discounting letters of credit: a) Discounting the LC and cash payment of the discounted price is completed against transfer of rights and proceeds of the LC, b) Discounting only applies to deferred LC which according to it payment of the LC price delayed to certain date after presentation and acceptance of deferred documents.
There are different orders issued by courts in various countries on discounting Deferred Payment letter of credits and possibility of discounting bank referring the opening of confirming bank with prove of fraud of the beneficiary and most orders consider no such right for the discounting bank.
On the other hand bank commitment in Deferred Payment letter of credit is not a negotiable instrument and the beneficiary may not enjoy the benefits of doctrine of holder with good intention applied to the negotiable documents.