International Credit Transfer Case Study

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UNITED NATIONS CONVENTION ON INDEPENDENT GUARANTEES AND STAND-BY LETTERS OF CREDIT The United Nation Convention on Independent Guarantees and Stand-by Letters of Credit was adopted on 11th December in the year of 1995 by General Assembly of the United Nations. After some time, it was approved and became effective on 1st January, 2000. The Convention is created to facilitate the use of stand-by letters of credit and independent guarantees. It toughens the general principles and features that are common to stand-by letters of credit and independent guarantees. The Convention defines the applicable obligation as an independent commitment which in international practice is known as an independent guarantee or as a standby letter of credit. The…show more content…
The Model Law arose when the electronic credit transfer systems were developed. Prior to the development of these systems, international funds transfers tended to be made by debit transfer, through the collection of cheques and other similar instruments.[5] The number of international transfers has significantly increased because of new high speed systems, as the systems highlighted concerns about the differences in the legal rules governing these transactions. The Model Law attempts to overcome these differences. Furthermore, the Model Law appeals to those entities that perform the payment orders as an ordinary part of their business, and therefore is not limited to banks. Additionally, this wider scope exists because in many countries non-banks, such as the postal service, operate a credit transfer service that is directly competitive with the service offered by…show more content…
Furthermore, The Uniform Rules are not particularly the law but they are more properly viewed as a handbook for banks that are used to set common understanding of expectations and terminology. The set of these rules are binding on all parties - principal, drawee, remitting bank and presenting or collection bank, in case otherwise expressly agreed, or if contrary to local laws.If the banks are used as intermediaries to collect payment from the importer for goods, which the exporter has sent, the use of collections reduces. Because, there is risks for both importer and exporter, as well as there could be a delay in receipt of payment by the exporter and the receipt of goods by the

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