red clause definition

red clause

Special provision in documentary credit where the beneficiary (usually the seller) is authorized to obtain an advance from the corresponding bank on an unsecured basis. The liability for default is assumed by the account party (usually the buyer) through the issuing bank. This clause is written usually in red ink, hence the name.

red clause is in the Banking, Commerce & Finance and International Trade & Relations subjects.

red clause appears in the definitions of the following terms: red clause letter of credit (L/C) and deferred payment letter of credit (L/C)

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