Letter of Credit Checklist for Merchandiser

A merchandiser should check the following points/clauses to verify that all terms and conditions in the L/C agree with his/her price quotation or sales agreement (PO) and that they will be able to comply with the order as requested by the buyer.

1. Identity of Parties – Are the names and addresses of your company and the importer’s organization correct and complete?
2. Confirmed – Is the L/C confirmed? If not, are there restrictions that prohibit it from being so?
3. Irrevocable – Can terms and conditions of the L/C be changed or canceled without your prior knowledge and consent?
4. Transferable- Does the L/C contain the remark “transferable” ? (if required)
5. Description of Goods – Are goods described correctly and completely to include trademark names and model numbers?
6. Unit Prices – Do unit prices and total price for goods agree with the prices that you previously quoted?
7.  Amount – Will the total amount cover all costs allowed by the L/C (e.g., documentation, transportation, insurance)?
8. Currency of Payment – Is L/C payable at sight or at a later date? Is it drawn on your bank or the importer’s bank?
9. Insurance – Who is responsible for insurance? If the importer pays, do you have evidence of adequate coverage?
10. Shipping Terms – Are terms correctly stated (e.g. Ex Works, FAS Port of Import, FOB Port of Export, CFR Port of Import, CIF Port of Import)?
11. Shipping Date – Will you have adequate time to produce and have goods ready for shipment for the specified date?
12. Transportation Charges – Are inland, ocean or air freight charges prepaid or collect? Who pays the transportation costs?
13. Partial Shipments – Are you allowed more than one shipment or must the complete order be contained in one shipment?
14. Transshipment – Can goods be unloaded and transferred to another vessel between the ports of export and import?
15. Documents – Can all documents be obtained in the exact requested form as and within the validity period of the L/C?
16. Presentation of Documents – Is there enough time after delivery to collect and present documents to the bank for payment?
17. Expiration Date – Can you comply with all the terms and conditions of the L/C before it automatically expires?