How long can an usance letter of credit be open for?

This topic has 2 replies, 3 voices, and was last updated 2 years, 2 months ago by Adharsh.

Viewing 3 posts - 1 through 3 (of 3 total)

Author

Posts
June 21, 2022 at 11:38 am #665

Fabian Robert
Participant

How long can an usance letter of credit be open for?

June 22, 2022 at 10:49 am #1173

Busra Aise
Participant

Hi.

Usance letters of credit don’t say how long they can be used for, and neither the UCP 600 nor the ISBP say how long they can be used.

Letters of credit are made so that payment can be delayed, giving the buyer more time to inspect or even sell the product. However, local laws in the country of the issuing bank often set a time limit that the letters of credit must follow.

This means that when you use a usance letter of credit, you need to know how it applies to your own situation.

June 22, 2022 at 11:50 am #1176

Adharsh
Participant

A usance letter of credit gives the buyer a payment to pay later. Both the buyer and the seller have already agreed on the terms of payment. The usance letter of credit can be divided into two groups based on its tenor. The usual tenors are:

1. After Bill of lading (B/L), payment must be made within 90 days.
2. This means that after the B/L is issued, the buyer has 90 days from the date of the B/L to make the payment for the goods.
3. Payment due within 30 days after sight.

This means that the buyer has 30 days from the date that the issuing bank receives the documents to pay for the goods.
Author

Posts

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic.