Letter of Credit

-
Letter of Credit
Section 2(p) of NRB Act 2058 defines Letter of Credit means an instrument issued by a bank to another bank instructing to accept cheque, draft, or Bill of exchange drawn by specified person up to the limit of specified amount .

It is a written instrument issued by a bank at the request of its customer, the importer (Buyer), whereby the bank promises to pay the exporter (Beneficiary) for gods or services, provided that the exporter presents all document called for, exactly as stipulated in the letter of credit and meet all other terms and conditions set out in letter of credit,
A letter of credit is also referred as a documentary credit.
It is used as an instrument for settlement of payment arising out of commercial transactions like sales/purchases in national/international trade.

BAFIA 2063 Section 2(gg)
Letter of credit means a letter written by one bank or financial institution to another bank or financial institution authorizing the latter to accept cheques, drafts or bills of exchange of any specified person within the limit of the amount specified therein.

Conditions
·         Primary information (personal necessary information of buyers and sellers)
·         Date and amount
·         Description of Goods
·         Other information (information about advising bank from sellers or beneficiary's side or if there is insurance or security information.)
            
            Types
   1.       Revocable and Irrevocable letter of credit
·         Revocable letter of credit can be cancelled or amended at any time prior or before the payment at will and without warning or notification.
·         Irrevocable cannot be modified without agreement  of all concerned parties.
   2.       Confirmed and Unconfirmed Letter of credit
·         Third Party Bank is involved in Confirmed Letter of credit and vice versa in Unconfirmed Letter of Credit
   3.       Fixed Time Bond letter of credit (Fixed time period for the payment)
   4.       Revolving Letter of Credit
·         Involving individual payments for multiple shipment,
·          Transactions involving shipment of goods on continuing basis and payment.
·         Individual shipment to be executed at different time.
   5.       Installment letter of Credit
·         Payment on installment Basis
   6.       Transferable letter of credit (Can made payment to another person who as not seller)
   7.       Red clause letter of credit ( full payment or few payment before arrival of goods or services)
   8.       Green clause letter of credit (पेश्की उपलब्ध गराउनका लागि खोलिएको)

Principles  1. Principle of autonomy 2. Strict Compliance



Popular posts from this blog

Basic Principles of Law of Evidence in Nepal

-
1. Evidence must be confined to the matters in Issue 2. Best Evidence must be produced 3. Hearsay evidence is no evidence 4. He who asserts must prove 5. Principle of Estoppel Evidence must be confined to the  matters in Issue • Principle cause behind this principle is to save time of the court for not being collected unnecessary evidence and make easy to arrive in decision. • However, the court’s decision should be depended on the evidence to be presented by the disputants. • Basic theme of this principle is that the evidence to be collected either by court or to be presented by disputants should be directly related to the dispute. • Section 3 of the Evidence Act, 2031 and Section 184a of the Court Procedure (Muluki Ain) are directly related to this principle. Section 3 of the Evidence Act States that:  The court may examine evidence on the fact in issue which is to be decided by it and the relevant fact thereof.  Explanation: "Rel...
Read more

JUDICIAL ACTIVISM IN NEPAL

-
General Background • The term "Judicial Activism" came into existence in the twentieth century to describe the act of judicial legislation i.e. judges involve in making positive law . • Judicial activism is the term used for the active role played by the court in a situation where statutory law is silent or even contrary. • In its early stage, judicial activism emerged in a form of judicial review, later on judiciary's active role in social life. Nowadays, public interest litigation (PIL) is an important area of judicial activism. • The present Constitution of Nepal provides fundamental rights provision for the special protection of women, children, aged, disable, marginal masses and disadvantage groups, and socio-economically deprived people . • It establishes an independent of judiciary equipped with the power of judicial review in order to realize social, political and economic justice. It has states that anyone can argue that right of locus standi has ...
Read more

Criminal Justice System of Nepal

-
The legal system of   Nepal   has been developed through two stages. The first stage is termed as the era of unmodified law and the second stage is called the era of codified law. The first stage or era of unmodified belongs to the   Karat Era, Lichhavi Era, Malla Era and Shah Era   prior to 1853A.D. Customs, traditions and social practices were regarded as law in this stage. The body of law was divided in two parts i.e. civil and criminal. To hear the different nature of cases, various kinds of courts were formed accordingly. The procedural law was very specific.    The whole system of law was based on indigenous customary law which was largely influenced by Hindu Philosophy. The era of codified law began with the promulgation of National Code 1853 A.D. The Code was influenced by the Napoleon code ofFrance. The Code is the initiation of the then Prime Minister Junga Bahadur Rana, who had been inspired by the Napoleon code of France during h...
Read more