I (Meaning and importance of Exports) Unit Structure

12. Clean L/C 
 
 
 
A clean L/C is one in which payment is made to the 
beneficiary against a clean draft. The bank does not put any 
condition as regards to the acceptance and payment of bills. 
13. Stand by L/C 
 
 
This type of L/C differs from other types in that the buyer and 
seller hope it will never be drawn upon. They are often used as 
security for open account trading where the seller requires some 
king of „back-up‟ in the event of the buyer not paying for the goods. 
They normally require the issuing bank to make payment to the 
seller upon presentation of documents evidencing non-payment by 
the importer. 
They are also commonly used in some countries as a 
substitute for a bank guarantee which, due to the regulations in that 
country, is not generally acceptable. 
14. Documentary L/C 
 
 
Most of the L/Cs are documentary L/Cs. Payment is being 
made by the bank against delivery of the full set of documents as 
laid down by the terms of credit. The important documents required

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To be submitted by the exporter under documentary L/C. 
15. Green Clause L/C 
 
 
The green clause L/C addition to permitting packing credit 
advance also provides for the storing facilities at the part of 
shipment. Green L/Cs are extensively used in Australian wool 
credits. 
16. Fixed L/C 
 
 
A fixed L/C is one which is issued for a fixed period and fixed 
amount. The exporter can draw the bills up to the given amount 
with in the given period, the L/C stands terminated when the 
amount is used up with in the given period. 
11.12.5