A: This letter of credit is also known as a subordinate letter of credit or a transfer letter of credit, and the bank that issued the letter of credit against it is also known as the second issuing bank。The beneficiary of the counterbacking letter of credit may be foreign or domestic, and the issuing bank can only open the counterbacking letter of credit in accordance with the irrevocable letter of credit。The opening of the back letter of credit is usually a middleman to resell other people's goods, profit from it, or when the two countries can not directly handle the import and export trade, through the third party to communicate trade。
The contents of the back letter of credit are generally the same as the original letter of credit except that the witness, beneficiary, amount, unit, time of shipment and validity period are subject to change。Since the new issuer needs to obtain the consent of the original issuer and the issuing bank when amending the terms of a backdated credit, the beneficiary must be careful when using the backdated credit。
Common changes in back letter of credit:
1. The beneficiary is the direct supplier。
2. The applicant is the beneficiary of the original certificate。
3. The unit price of the amount is reduced。
4. The validity period of shipment is shortened。
5, if the middleman is not willing to reveal the name of the supplier, can stipulate that the bill of lading shipper or other documents other than the invoice to make the name of a neutral person or a third party, so as not to disclose the name of the actual supplier。