How to formulate LC terms?

Quoting from [spider man]:


Replying to [jadedev]:

Then tell your supplier that you will issue lc in his favour but he has to issue bank guarantee in your favour. If he agrees to it, then you should instruct your bank to incorporate the following clause in lc

" L/C will become operative only upon the receipt of bank guarantee by applicant".

As soon as you receive bank guarantee, you approach your bank to make the LC operative as bank guarantee has been received. Your bank would do so.

Under this mechanism, you still have to pay before you inspect goods but you have the option to claim funds back if you are cheated.

Still, I am not sure if this is practically possible.

Regards

No seller in his right mind is going to issue a performance bond before an L/C is opened.

What they will do is issue a non-operative performance bond, that only opens upon receipt of the L/C.  Also the performance bond will cease to exist upon presentation of documents for payment.   It is the responsibility of the buyer to inspect the goods before shipment not after.  Even under Term draft L/C No seller would allow a buyer to call in a performance bond especially since they have already financed the goods for the buyer.

Ranger