Uncategorized LC AT SIGHT VS DP By Mr Old Man Posted on March 9, 2010 4 min read 19 0 18,523 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr Dreamwoods's QueryExplain L/C at sight in English I have to explain L/C at sight to my customer in English, who can help? The define, how to operate,and what the application have to paid for it, and when the money cut from their account. Also, the different with D/P on paid and paid time for the importer. Anyone can help me? ——————-Mr. Old Man's Response LC at sight versus D/P Dear Dreamwoods, LC at sight has two types: (i) LC available by negotiation of draft at sight i.e., (sight) negotiation LC; and (ii) LC available by sight payment; i.e., (sight) payment LC. For the former, the beneficiary may obtain the payment right at the time of presentation by negotiating the sight draft and the documents with the nominated bank. The issuing bank must pay/reimburse upon receipt of the complying documents. For the latter, the beneficiary is paid at sight, i.e., right at the time the complying documents (sight draft not required) are presented to the issuing bank or the nominated bank. Of course in both cases, the issuing bank/nominated bank has five banking days from the day of receipt the documents to examine the documents and determine if they are complying with the LC. Normally the issuing bank will debit the applicant/buyer's account right at the time the payment/reimbursement is made to the beneficiary/negotiating bank. The main difference between payment by LC at sight and payment by D/P is as follows: With payment by LC sight (subject to UCP 600), the beneficiary has a guarantee of payment by the issuing bank provided the documents presented are complying, whereas with D/P (subject to URC 522), the beneficiary is paid only when the buyer agrees to take up the documents. In the event for some reason, e.g., the price of the goods falls down and the buyer does not want to receice the goods and hence refuses to take up the documents, the collecting/presenting bank may hold the documents at the remitting bank's disposal and risks or return them to the remitting bank or the principal (buyer). The beneficiary (seller) normally prefers the payment to be effected by LC as said the payment is guaranteed by the issuing bank and is to be effected at sight when the complying documents are presented, whereas the buyer prefers D/P as said the buyer may refuse the documents or delay taking up the documents/payment until the goods arrive at destination port. The above is just an explanation in brief. You should read more to explain to your customers. Best regards, Nguyen Huu Duc …