Terminology

Acceptance

Signature by the Drawee of a Bill of Exchange of his agreement to the order of the Drawer. It must be in writing on the Bill of Exchange and signed by the Drawee.

Advising Bank

A bank instructed by an Issuing Bank, under a Letter of Credit (usually in the country of the beneficiary), to communicate the terms of the Letter of Credit to the Beneficiary, to accept presentation of documents and to effect payment under the Letter of Credit.

Air Waybill

Document of carriage with respect to the transport of goods by air.

Back to Back Letter of Credit

A Letter of Credit under which the documents presented may be presented (substituting at least the invoice) under another Letter of Credit. For example: a seller, theBeneficiary under a Letter of Credit, requests the Advising Bank to open another Letter of Credit in favour of the supplier of that Beneficiary based on the security of the intial Letter of Credit.

Bearer

In respect of:
(a) a Bill of Exchange, the person in possession of a Bill of Exchange which is payable to the bearer (i.e. which is expressed to be so payable, or on which the only or last Indorsement is a Blank Indorsement); and

(b) a Bill of Lading, the person in possession of a Bill of Lading which makes the goods deliverable to the bearer (i.e. which is expressed to make the goods so deliverable, or on which the only or last Indorsement is a Blank Indorsement).

Bearer Bill of Lading

A Bill of Lading which makes the goods deliverable to the Bearer. Unlike a Straight Bill of Lading or an Order Bill of Lading it does not name the person to whom or to whose order the goods are to be delivered. See also, however, Order Bill of Lading which does not refer to a named Consignee.

Beneficiary

The party to whom the undertaking of the Issuing Bank (and the Confirming Bank in respect of a Confirmed Letter of Credit) under a Letter of Credit is given.

Bill of Exchange

An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand at a fixed or determinable future time a certain sum to or to the order of a specified person, or to the Bearer.

Bill of Lading (B/L)

A document issued by or on behalf of a carrier to the Counterparty (usually referred to as the Shipper) to a contract of carriage of goods by sea. Principal functions include: (i) Document of Title; (ii) receipt by the carrier; (iii) evidences apparent condition of the goods; (iv) evidences the terms of the contract of carriage; and (v) operates to transfer contractual rights.

Blank Indorsement

An Indorsement of a Bill of Exchange or a Bill of Lading which specifies no Indorsee (in respect of a Bill of Exchange) or transferee (in respect of a Bill of Lading). A Bill of Exchange or a Bill of Lading so indorsed becomes payable to the Bearer.

Bonded Warehouse

A warehouse in which goods are stored to defer payment of any duty payable on such goods until entry into the domestic market in which the warehouse is located.

Carriage and Insurance Paid (CIP)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers the goods, cleared for export, to the carrier nominated by him. The seller contracts (or procures a contract) for and pays the cost of carriage to bring the goods to the named destination and insures against the buyer's risk of loss of or damage to the goods during the carriage.

Carriage Paid To (CPT)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers the goods, cleared for export, to the nominated carrier. The seller must contract (or procure a contract) for and pay the cost of carriage to bring the goods to the named destination.

Cash Against Documents

Indicated invoice amount to be paid by the buyer/importer at sight on presentation of relevant commercial documents e.g. Bill of Lading, insurance certificate, etc.

Certificate of Inspection

A certificate issued by an independent inspection organisation certifying, at a minimum, that the inspector has inspected goods (either pre or post shipment) and found them to be in apparent good condition.

Certificate of Origin

A certificate issued by a seller or a recognised third party as to the place of growth, production or manufacture of goods.

Certificate of Quality / Quantity

A certificate issued by a seller or recognised third party that goods are of a particular quality or quantity. Absent of fraud, the certificate will be binding if so agreed between the parties.

Claim

Presentation of documents under a Demand Guarantee or Letter of Credit.

Claused Bill of Lading

A Bill of Lading which is qualified by a statement of defect in the goods.

Clean Bill of Lading

A Bill of Lading which bears no clause or notation that declares a defective condition of the goods and/or packaging.

Clean Collection

A Collection involving financial documents (e.g. Bill of Exchange) only.

Collecting Bank

Any bank, other than the Remitting Bank, involved in processing a Collection.

Collection

The handling by banks, in accordance with instructions received, of documents in order to: (i) obtain payment and/or Acceptance; (ii) deliver documents against payment and/or against Acceptance; or (iii) deliver documents on other terms and conditions.

Confirmed Letter of Credit

A Letter of Credit to which the Advising Bank or Correspondent Bank adds its own undertaking to that of the Issuing Bank to honour or negotiate the Letter of Credit (as applicable).

Confirming Bank

An Advising Bank or a Correspondent Bank which adds its own undertaking to that of the Issuing Bank to honour or negotiate the Letter of Credit (as applicable).

Consignee

The person specified in a Bill of Lading (or Sea Waybill) to whom, or to whose Order (in respect of a Bill of Lading) the goods are to be delivered.

Correspondent Bank

An Advising Bank which is the Issuing Bank's correspondent in the country of the Beneficiary.

Cost and Freight (C&F)

An Incoterm which may be used in respect of transport by sea or inland waterway. The seller delivers the goods on board the vessel or procures the goods already so delivered. The seller contracts (or procures a contract) for and pays the costs and freight to bring the goods to the named port of destination. The seller clears the goods for export.

Cost Insurance and Freight (CIF)

An Incoterm which may be used in respect of transport by sea or inland waterway. The seller delivers the goods on board the vessel or procures the goods already so delivered. The seller contracts (or procures a contract) for and pays the costs and freight necessary to bring the goods to the named port of destination and obtains insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller clears the goods for export.

Covenant

An agreement to do or not to do something. A breach of a covenant in a Facility Agreement is almost invariably an Event of Default, if not remedied within any Cure Period.

Deed

A special form of contract which complies with special rules as to creation. Unlike a contract, a deed needs no consideration to be given to be effective. Actions for breach of a deed may be brought during the period of 12 years from the breach. Certain transactions require the use of a deed, eg. the grant of a power of attorney.

Delivered At Place (DAP)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers when the goods are placed at the buyer's disposal on the arriving means of transport, ready for unloading at the named place of destination. The seller clears the goods for export.

Delivered At Terminal (DAT)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers when the goods are placed at the buyer's disposal, unloaded from the arriving means of transport, at a named terminal at the named port or place of destination. The seller clears the goods for export.

Delivered Duty Paid (DDP)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers when the goods are placed at the buyer's disposal cleared for import ready for unloading from the arriving means of transport at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods thereto including any duty for import.

Documentary Collection

A Collection involving financial documents (e.g. Bill of Exchange) and commercial documents (e.g. Bill of Lading).

Documentary Credit

See Letter of Credit.

Documents Against Acceptance (D/A)

A Collection in respect of which the documents (e.g. Bill of Lading) are delivered to the Drawee under the Collection against Acceptance of the Bill of Exchange.

Documents Against Payment (D/P)

A Collection in respect of which the documents (e.g. Bill of Lading) are delivered to the Drawee under the Collection against payment of the Bill of Exchange.

Drawee

In respect of:
(a) a Bill of Exchange, the person upon whom a Bill of Exchange is drawn and who is thereby ordered to pay; and

(b) in respect of a Collection, the party to whom presentation of the documents is to be made in respect of a Collection.

Drawer

Person who draws the Bill of Exchange and gives the order to pay.

Evergreen Letter of Credit

A Letter of Credit (usually a Standby Letter of Credit) which is automatically reinstated following the specified Expiry Date unless the Issuing Bank gives notice that it is to expire.

Ex-Works (EXW)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers when the goods are placed at the disposal of the buyer at the seller's premises or another named place not cleared for export and not loaded on any collecting vehicle.

FCL

Full Container Load.

Fixed Charge

A Charge which prohibits the Chargor from dealing with the assets subject to it.

Floating Charge

A Charge which floats over the assets subject to it (eg. stock-in-trade), allowing the Chargor to deal with such assets in the ordinary course of its business until the Charge crystallises over the assets.

Force Majeure

Events outside the control of parties to a contract, such as acts of nature, governments or regulators. Contract performance is forgiven or extended by a period of force majeure.

Foreign Bill of Exchange

A Bill of Exchange which is not an Inland Bill of Exchange. A foreign Bill of Exchange must be protested to establish its Dishonour whereas an Inland Bill of Exchange need not be (although it may be).

Forwarder's Certificate of Receipt (FCR)

A receipt issued by a Freight Forwarder in respect of goods received by it.

Forwarding Agent

See Freight Forwarder.

Free Alongside Ship (FAS)

An Incoterm which may be used in respect of transport by sea or inland waterway. The seller delivers when the goods, cleared for export, are placed alongside the vessel at the named port of shipment.

Free Carrier (FCA)

An Incoterm which may be used irrespective of the mode of transport used. The seller delivers the goods, cleared for export, to the Carrier nominated by the buyer at the named place. The seller is responsible for loading only if delivery occurs at the seller's premises.

Free on Board (FOB)

An Incoterm which may be used in respect of transport by sea or inland waterway. The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The seller clears the goods for export. See also Simple Free on Board.

Freight Forwarder

A person engaged by a Shipper either as Principal or as Agent of the Shipper whose principal duties are to procure third parties to perform, among other things, the carriage, storage, packing and handling of goods.

Further Assurance

A clause imposing on the parties obligations to perform acts in the future to give effect to a transaction occurring now e.g. to serve a notice or complete a registration. Such a clause provides a safety net to require co-operation if it transpires something unpredicted needs to be done.

FX

Foreign exchange.

Grace Period

(a) After a Default has occurred, days of grace may be stated within which the Default may be remedied before the right to require repayment arises.

b) A period when interest or Principal is not yet payable.

Green Clause Letter of Credit

A variant of the Red Clause Letter of Credit also enabling the Beneficiary to draw on the Letter of Credit in advance of the shipment of the underlying goods but requiring that the goods are stored in the name of the bank.

Haircut

Acceptance by a creditor of a reduction on its strict entitlement. For example, a reduction in interest or fees or, in the context of a loan sale, a sale at a discount to the par value of the loan.

Honour

In respect of a Letter of Credit, to pay at sight (if it is a Sight Letter of Credit); to incur a deferred payment undertaking and pay at maturity (if it is a Deferred Payment Letter of Credit); to accept a Bill of Exchange drawn by the Beneficiary and pay at maturity (if it is an Acceptance Letter of Credit).

Import Finance

Finance provided against the value of goods deliverable pursuant to a contract of sale either in transit or following import into country of destination (e.g. by way of issue of a Letter of Credit in favour of the seller of the goods).

In the Money

In respect of a party to a Derivative transaction, a transaction is 'in the money' if early termination of the transaction would give rise to liability of the Counterparty.

Incoterms® 2010

The International Chamber of Commerce rules for the use of domestic and international trade terms with entry into force 1 January 2011.

Independent Payment Undertaking

An Undertaking issued by a buyer pursuant to a contract for sale to make payment to the person to whom the Undertaking is addressed against presentation of the documents specified therein. Prevalent in the oil trade and addressed typically to the financing bank of a seller under a contract for sale to finance the seller's own purchase of oil under a back to back contract for sale. As the Undertaking is addressed to the financing bank, the financing bank has recourse to the buyer which issued the Undertaking.

Indorsement

In respect of a:
(a) Bill of Exchange, in order to operate as a Negotiation must be written on the Bill of Exchange (or on an Allonge) and signed by the Holder (the signature of the Holder is sufficient) and completed by Delivery; and

(b) Bill of Lading, in order to operate as a Negotiation must be written on the Bill of Lading and signed by the Consignee, the Shipper or a transferee of either of them (each as applicable).

Interest Holiday

A period when interest is rolled up or capitalised rather than being paid in cash by a debtor.

Interest Ratchet

A method of changing the interest rate payable in respect of a Facility depending on the financial performance of the debtor or assets over which Security has been granted.

Intermodal Transport Document

See Multimodal Transport Document.

Irrevocable Letter of Credit

A Letter of Credit which can only be cancelled with the consent of the Applicant, Beneficiary and the Issuing Bank. UCP 600 can only apply to Letters of Credit which are irrevocable.

Issuing Bank

The bank which is requested by the Applicant to open a Letter of Credit.

LCL

Less than Container Load.

Letter of Credit

An undertaking by a bank to pay (either immediately or at a future time) against specified documents on terms that the bank will be reimbursed by the Applicant.

Letter of Credit Available by Negotiation

A Letter of Credit which may be negotiated by a Nominated Bank by Discounting the Bills of Exchange presented to it under the Letter of Credit.

Letter of Indemnity

An indemnity issued by a seller to a buyer or a buyer to a Carrier in respect of any loss which may be suffered by a buyer or a Carrier (as applicable) as a result of the seller or the buyer (as applicable) being unable to provide the buyer or the Carrier (as applicable) with Bills of Lading. Letters of indemnity are prevalent in the oil trade.

Lien

The right of a creditor to detain goods until money owed to that creditor is paid. Of the various categories of lien, the most relevant to Trade Finance is the common law (or possessory) lien and the contractual lien. The former arises by operation of law whereas the latter is created by contract. Like a Pledge, a lien is a form of possessory Security. Unlike a Pledge: (i) a lien does not give rise to a right of sale of the goods; and (ii) the goods are deposited not for Security but for some other purpose (e.g. storage).

Mandatory Costs

A component of the interest charged to a debtor on a LIBOR based floating rate Facility. In addition to LIBOR, the Margin and any increased costs, the debtor has to pay this additional cost which is usually calculated according to a standard formula, suggested by the LMA. The mandatory cost is the additional cost which a creditor incurs based on the amount of their underlying borrowings including supervision fees to the Financial Services Authority and the cost of placing deposits with the Bank of England or the European Central Bank.

Marine Insurance

Broadly, insurance covering loss or damage of goods at sea. The terms of the contract of sale normally provide whether the costs of marine insurance are to be borne by the seller or the buyer (see also CIF, FOB).

Mark to Market

The value of assets (typically goods) derived from their market value rather than their historic value often ascertained by reference to a specified market (e.g. London Metals Exchange (LME), New York Mercantile Exchange (NYMEX), Shanghai Futures Exchange (SHFE) etc) or index (e.g. Metal Bulletin in respect of non-ferrous metals and steel markets), Platts (in respect of energy, petrochemicals and metals) etc). Particularly relevant to Borrowing Base Finance.

Mate's Receipt

Document issued by a shipowner acknowledging his receipt of goods including their quantity and condition which may be presented to the shipowner in exchange for Bills of Lading.

Multimodal Transport Document

A document issued by a multimodal transport operator pursuant to which the operator undertakes responsibility for a cargo of goods from the time of receipt to the time of delivery notwithstanding that two or more modes of transport will be used in respect of the transit of the goods.

Negative Pledge

An Undertaking by a debtor to a creditor or third party to a creditor in respect of finance provided by the creditor to the debtor that it will not grant Security over any of its assets (other than Security in favour of the creditor in respect of a secured financing).

Negotiable

An instrument which is negotiable is:
(a) Transferable; and

(b) capable, as a result of such transfer, of conferring upon the transferee good title to the instrument irrespective of any defect in the title of the transferor.
A Bill of Exchange is Negotiable (unless expressly excluded – see also Non Negotiable). A Bill of Lading is Transferable (if made Transferable – see also Bearer Bills of Lading, Non Negotiable, Order Bills of Lading and Straight Bills of Lading).

Negotiation

Negotiation, in respect of:
(a) a Bill of Exchange, occurs when it is transferred from one person to another in such a manner as to constitute the transferee the Holder of the Bill of Exchange. A Bill of Exchange payable to the Bearer is negotiated by Delivery. A Bill of Exchange payable to Order is negotiated by the Indorsement of the Holder completed by Delivery;

(b) a Bill of Lading, see Transferable; and

c) a Letter of Credit, occurs when the Nominated Bank purchases Bills of Exchange (drawn on a bank other than the Nominated Bank) and/or complying documents, by advancing or agreeing to advance funds to the Beneficiary on or before the day on which reimbursement is due to the Nominated Bank.

Negotiation Bank

A bank which has purchased documents to be presented under a Negotiation Letter of Credit.

Negotiation Letter of Credit

A Letter of Credit in respect of which the undertaking of the Issuing Bank (and, in respect of a Confirmed Letter of Credit, the undertaking of the Confirming Bank) are directed to any bank which discounts any Bill of Exchange and other documents specified in the Letter of Credit.
See also Letter of Credit Available by Negotiation.

Nominated Bank

The bank or banks with which a Letter of Credit is available (i.e. at which the documents specified in the Letter of Credit may be presented).
See also Advising Bank and Confirming Bank.

Non Negotiable

In respect of a:
a) Bill of Exchange, a Bill of Exchange which contains words prohibiting transfer or indicating an intention that it should not be Transferable; and

b) Bill of Lading, a Bill of Lading which makes the goods deliverable to the Consignee only and does not contain words providing for transfer, or contains words purporting to prevent transfer.

Non Transferable Letter of Credit

A Letter of Credit which is not designated as a Transferable Letter of Credit.

Notify Party

The party specified as such in a Bill of Lading to whom notification of arrival of the goods should be given by the Carrier.

Novation

A rewriting of a contract to allow both the benefit and burden of a contract to be transferred to a new party. A novation can only occur with the consent of all the parties to a contract.

Obligee

The person entitled to enforce performance of an obligation by another, the Obligor.

Obligor

The person required to perform an obligation.

Off Balance Sheet

A transaction that is not required to be shown in the balance sheet of a company or in the consolidated balance sheet of a group of companies.

Open Account

Payment by buyer to seller by way of telegraphic transfer, mail or SWIFT transfer usually against documents of title to the goods or delivery of the goods sold.

Order

In respect of:
(a) a Bill of Exchange, a Bill of Exchange which is expressed to be so payable (e.g. to "x" or order or to the order of "x"), or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be Transferable; and

(b) a Bill of Lading, see Order Bill of Lading.

Order Bill of Lading

A Bill of Lading which makes the goods deliverable to the order of a person named in the Bill of Lading. The Bill of Lading may either specify delivery to a named Consignee or to his "order or assigns" (ie. made out to the order of the Consignee) or merely to "order or assigns" without naming a Consignee (i.e. made out to the order of the Shipper).

Out of the Money

In respect of a party to a Derivative transaction, a transaction is out of the money if early termination would give rise to a liability of that party to the Counterparty.

Packing Letter of Credit

See Green Clause Letter of Credit and Red Clause Letter of Credit.

Packing List

Used for, inter alia, freight calculation and customs purposes, includes details of Consignee, vessel and port of departure and contents and weight of each package.

Payment Under Reserve

If the bank to which documents are presented by a Beneficiary under a Letter of Credit contends that the documents do not comply with the terms of the Letter of Credit, the bank may nevertheless be willing to make payment under the Letter of Credit to the Beneficiary against an indemnity issued by the Beneficiary or "under reserve". If the Applicant is not willing to take up the documents as presented by the Beneficiary, the bank will seek to recover the payment under the Letter of Credit by claiming under the indemnity issued by the Beneficiary.

Pledge

Actual or constructive delivery of possession of an asset to a creditor by way of Security which, unlike a Lien, entitles the creditor to sell the asset in the Event of Default by the Pledgor. In practice, assets susceptible to a pledge are goods and documentary intangibles (e.g. Bills of Lading, Bills of Exchange, Promissory Notes). Like a Lien, a pledge is a form of possessory Security.

Post-Export Finance

Finance provided to a seller by Discounting Bills of Exchange presented by the seller in respect of a Collection, a Letter of Credit Available by Way of Negotiation or a Negotiation Letter of Credit, or by prepaying a Deferred Payment Letter of Credit.

Pre-Export Finance

Finance provided (and often secured by way of Security Assignment) against the value of receivables payable in respect of the export of goods.

Preferential Creditors

Those creditors of a company listed in schedule 6 of the Insolvency Act 1986 who are due payment of debts from an insolvent company ahead of creditors holding only Floating Charges and unsecured creditors. After 15 September 2003 the Crown is no longer a preferred creditor leaving employees' claims for wages and holiday pay together with contributions to occupational pension schemes.

Presenting Bank

The Collecting Bank making presentation of the documents to the Drawee in respect of a Collection.

Promissory Note

An unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at fixed or determinable future time, a certain sum of money to, or to the order of, a specified person or to the Bearer.

Protest

A formal declaration that a Bill of Exchange has been dishonoured made by a notary public. A Foreign Bill of Exchange must be protested to establish its Dishonour whereas an Inland Bill of Exchange need not be (although it may be).

Received Bill of Lading

A Bill of Lading which states that the goods have been received by the Carrier for shipment.

Red Clause Letter of Credit

A Letter of Credit enabling the Beneficiary to draw on the Letter of Credit in advance of the shipment of the underlying goods which is payable against documents other than transport documents. The clause permitting the Beneficiary to draw on the Letter of Credit in advance is traditionally printed in red. Typically used by the Beneficiary to finance its own purchase or production of the goods.

Revocable Letter of Credit

A Letter of Credit which may be cancelled or amended by the bank undertaking to pay, without the consent of the Beneficiary. UCP 600 cannot apply to Letters of Credit which are revocable.

Revolving Letter of Credit

A Letter of Credit for which the credit limit is not limited to a fixed amount but rather is restored as provided for in the Letter of Credit (e.g. by reference to a period of time or shipment).

Sea Waybill

A document which is not a Bill of Lading but is such a receipt for goods as contains or evidences a contract for the carriage of goods by sea and identifies the person to whom delivery of the goods is to be made by the Carrier in accordance with that contract.

Unlike a Bill of Lading, it is non-Transferable. Presentation of the sea waybill by the Consignee is not, however, required to take delivery of the goods.

Shipped Bill of Lading

A Bill of Lading which states that the goods have been shipped (i.e. put on board the carrying vessel).

Shipper

A seller of goods which is party to a contract of carriage of goods by sea.

Sight Bill of Exchange

A Bill of Exchange which is expressed to be payable on demand, or at sight, or on presentation or in which no time for payment is expressed.

Sight Letter of Credit

A Letter of Credit which provides for payment upon presentation of documents allowing time only for examination of the documents for compliance with the Letter of Credit.

Silent Confirmation

Confirmation of a Letter of Credit by an Advising Bank without the authorisation of the Issuing Bank.

Simple Free on Board

Free on Board in respect of which the buyer nominates the vessel onto which the goods are to be delivered on board by the seller pursuant to a contract of carriage entered into between the buyer (or its Agent e.g. Freight Forwarder) and the Carrier.

Snooze and Lose

A provision whereby consent is deemed to have been given to a request if a refusal is not given in a stated period of time.

Special Indorsement

Indorsement of a Bill of Exchange which specifies the person to whom, or to whose Order the Bill of Exchange is to be payable.

Spent Bill of Lading

A Bill of Lading in respect of which the goods covered by it have been delivered to the person entitled to delivery under the Bill of Lading.

Standby Letter of Credit

A Letter of Credit where the documents to be presented for payment do not include commercial documents relating to the goods (e.g. documents evidencing shipment of the goods such as a Bill of Lading). Similar in effect to a Demand Guarantee.

Straight Bill of Lading

A Bill of Lading which makes the goods deliverable to the Consignee only and does not contain wording providing for transfer, or contains wording purporting to prevent transfer.

Strict Compliance

A fundamental principle of a Letter of Credit (the other being the Autonomy of the Letter of Credit), according to which the bank is entitled to reject documents which do not strictly conform to the terms of the Letter of Credit.

Subordinated Debt

Debt which cannot generally be repaid until other debt (usually called Senior Debt) has been repaid in full. Sometimes the senior creditor will allow payments of interest and Principal to the subordinated creditor as long as there is no Default under its own Facility.

Subordination

A rearrangement of the order in which payments of debt are to be made. The subordinated person agrees to accept its debt cannot be repaid until indebtedness to a third party is repaid in full. Strictly, subordination does not deal with the priority of Security, but often a document subordinating debt will also alter the priority of those interests.

SWIFT

A service which permits financial messages to be sent securely so that recipients can rely on the identity of the sender.

Tenor

The period for which a loan or debt instrument is to be outstanding.

Term Bill of Exchange

See Time Bill of Exchange.

Term Facility

A Facility that is available to the debtor for the Tenor. The creditor may only seek repayment in accordance with the provisions of the Facility Agreement. Contrast a Demand Facility.

Through Bill of Lading

In respect of the transit of goods involving multiple stages, a Bill of Lading by which the Carrier undertakes to carry the goods for the sea stage of the transit and either carry the goods for all other stages of transit or arrange contracts with Carriers in respect of such other stages of transit.

Time Bill of Exchange, Time Draft

A Bill of Exchange which is expressed to be payable at a fixed period after date or sight or on or at a fixed period after the occurrence of a specified event which is certain to happen.

Top-Up Undertaking

An Undertaking by a debtor to prepay a portion of the finance provided by a creditor or to provide additional quantities of assets in order to restore the Loan to Value Ratio to the specified percentage.

Tranche

Part of a Facility, often categorised by the use to which that part of the Facility may be put, or by the Margin to be charged.

Transferable

The rights arising under an instrument which is transferable can be transferred by Delivery of the instrument (together with any necessary Indorsement). An instrument which is merely transferable and not Negotiable, confers upon the transferee, only such interest as the transferor had and the transferee does not take free from the transferor's defects in title.

A Bill of Lading is transferable (ie. transfer operates as a transfer of constructive possession of the goods and may, if so intended (eg, as specified in a contract of sale), operate as a transfer of the title to them) if made transferable (see also Bearer Bill of Lading, Non Negotiable, Order Bill of Lading and Straight Bill of Lading).
A Bill of Exchange is Negotiable unless expressly excluded (see also Non Negotiable).

Transferable Letter of Credit

A Letter of Credit designated as such in respect of which the Beneficiary may request (although not require) the appropriate bank to make the Letter of Credit available to one or more other parties. Typically used by the Beneficiary of the Letter of Credit to pay its supplier.

A transferable Letter of Credit avoids the risk inherent in a Back to Back Letter of Credit that documents which are accepted and paid against under a Letter of Credit issued on the Security of another Letter of Credit are not accepted and paid against under that other Letter of Credit.

Trust Receipt

Mechanism by which goods or Bills of Lading in respect of which the bank has been granted a Pledge are released to the Pledgor for the purpose of sale against an acknowledgement by the Pledgor that it holds the goods and the proceeds of sale on trust for the bank, the effect of which is that the bank's possession for the purposes of the Pledge is maintained. Typically used to allow a bank to release goods or Bills of Lading to a Pledgor to repay financing provided by the bank to the Pledgor from the proceeds of sale of the goods.

Unconfirmed Letter of Credit

A Letter of Credit to which the Advising Bank does not add its own undertaking to that of the Issuing Bank to honour or negotiate the Letter of Credit (as applicable).

Uniform Customs and Practice for Documentary Credits 600 (UCP 600)

Published by the International Chamber of Commerce, rules that apply to a Letter of Credit (including any Standby Letter of Credit to the extent applicable) when the Letter of Credit expressly states that it is subject to the rules. They are binding on all parties thereto unless expressly modified or excluded by the Letter of Credit. The rules are intended to supersede the Uniform Customs and Practice for Documentary Credits 500 (being the terms operative from 1993 to 2007).

Uniform Customs and Practice Supplement for Electronic Presentation 600

A supplement to the Uniform Customs and Practice for Documentary Credits 600 applicable to a purely electronic Letter of Credit (i.e. in respect of which documents are presented by the Beneficiary in electronic rather than paper form).

Usuance Bill of Exchange, Usuance Draft

See Time Bill of Exchange.

Warehouse Receipt, Warehouse Warrant

Document issued by a warehouseman to a creditor in respect of goods owned by a debtor stored in a warehouse usually specifying that the goods are held to the order of the creditor.

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