LPC Notes International Trade and Transactions Revision Notes (Distinction A+) 2023

Letter of Credit - -guarantee from importer's bank that it will act on behalf of the importer and pay the exporter for the merchandise if all relevant documents specified in the letter of credit are presented according to the terms of the letter of credit in essence substituting its creditworthiness for that of the importer -Time draft - -written order instructing importer or agent, the importer's bank, to pay the amount specified on its face on a certain date -bill of lading - -document issued by common carrier specifying that it has received the goods for shipment; it can serve as the title for the goods -Banker's Acceptances - -exporter's bank presents the shipping documents and the time draft tot he importer's bank after taking the title for the goods via the bill of lading, the importer's bank accepts the time draft at this point banker's acceptance created negotiable money market instrument secondary market exists for banker's acceptances can be held to maturity by exporter or sold in money market (at a discount) similar risks, so sell at rates like CDs