MIXED PAYMENT LC

QUERY
by nura on Fri Jan 30, 2009 12:29 pm

Hey!!

I have an importer who wants to issue an LC in favor of an exporter in India. Now the proforma invoice shows that there will be USD 25000 paid in advance by TT. Our bank will make that payment. Now how should we construct the LC? Should we issue a LC for the full value while saying that 25000 will be paid in advance or should we issue LC for the reduced amount? If we issue LC for the reduced amount, can we call it a “Mixed Payment” LC?
Nura
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COMMENT
by nhduc on Fri Jan 30, 2009 4:28 pm

Hi,

Suppose the total amount of pro-forma invoice or contract is USD100,000.00 of which USD25,000.00 is to be paid in advance by T.T and the balance is to be paid by LC at sight.

The payment of USD25,000.00 is understood to be effected outside LC, therefore, you just issue LC for the balance amount only, i.e., USD75,000.00.

Field 32 (Currency, Amount): USD75,000.00
Field 42 C (Draft at): SIGHT FOR 75 PCT OF INVOICE VALUE or SIGHT FOR USD75,000.00

This is not a mixed payment LC.

Best regards,
Nguyen Huu Duc …