International Payments

Should a U.S. exporter who is the beneficiary of an advised letter of credit attempt to retain control over the product that has been exported to a foreign buyer until such point that the U.S. exporter receives payment under the advised letter of credit?

While not necessarily essential or critical, it may prove to be in the exporter's best interest to do so. This is likely to be the case when a seller is unable to perform exactly as required under an advised letter of credit and is also unable to correct its performance deficiency. In such a circumstance the seller will have to ask the buyer to waive or accept the seller's performance deficiency. It is obviously much easier for a seller to obtain a buyer's agreement to waive a discrepancy under an advised letter of credit if the buyer does not yet have access to or possession of goods that have been shipped. Sellers must always keep in mind that letter of credit discrepancies which cannot be corrected by the seller and which the buyer refuses to waive will cause a seller to fail to meet a letter of credit's performance requirements and force a seller to forfeit the payment protection that had been available to the seller under the advised letter of credit.

More FAQs...