red clause letter of credit (L/C)
Definition
L/C that carries a provision (traditionally written or typed in red ink) which allows a seller to draw up to a fixed sum from the advising or paying-bank, in advance of the shipment or before presenting the prescribed documents. It is normally used only where the buyer and seller have close working relationship because, in effect, the buyer is extending an unsecured loan to the seller (and bears the financial risk and the currency risk). Rare nowadays, the red clause L/Cs were once popular in fur trade with China and wool trade with Australia.
red clause letter of credit (L/C) is in the Accounting & Auditing, Banking, Commerce & Finance, International Trade & Relations and Purchasing & Procurement subjects.
red clause letter of credit (L/C) appears in the definition of the following term: deferred payment letter of credit (L/C)
This content can be found on the following page:
http://www.businessdictionary.com/definition/red-clause-letter-of-credit-L-C.html
email to a friend
print this definition
cite this definition
link to this page