Factors Contributing To The Use Of Commericial Letter (S) Of Credit On International Business Transaction(S): A Case Of Manufacturing Industries In Kenya
The use of letters of credit has become a very important aspect of international trade due to the nature of international dealings including factors such as distance, differing laws in each country and difficulty in knowing each party personally. The LC therefore helps both the importers and exporters in the sense that the importer will be waved the liability of incurring bad debts and on the other hand the exporter is saved the fear of losing his money when dealing with the importer directly. It is therefore a hedging and also the most sophisticated payment. This study attempted to establish factors contributing to the use of Letter of credit in international business aspiring to address the objectives which touches on the impact of exporter/importer standing bank credibility and its association to using the LC, explore the extend on the bank inefficiencies and the central bank policies contributing to the LC ,how the bank financing to the company contributes to the application of the LC method and finally ascertain which risks and challenges are a major concern to pushing the use of LC. The study targeted forty Companies from the manufacturing sector in Kenya considering industries on areas of Plastics and Rubber, Chemicals and Allied, Building, Mining and Construction, Food and Beverages and Pharmaceuticals and Medical Equipment’s considered to be using LC for its payments. Simple random sampling technique was used in this study to enable equal chances of all the targeted companies being selected. The study also used respondents with expertise in this area of study to answer questions being financial controllers, procurement or logistics manager and directors. The primary data was collected using structured interviews and questionnaires which were then analyzed using statistics, Graphs and pie charts. Summary of the findings was discussed and recommendations made.
Letters of Credit: A Theory on the Legal Basis of the Payment Obligation of Issuing Bank
It is argued that, to a businessman nothing is simpler than an irrevocable letter of credit transaction; he or she never thinks about the nature of the obligation incurred by the issuing bank. However, significant uncertainty, ambiguity as to the nature of the obligation arises when lawyers, judges or legal scholars start to think about the legal basis of the bank’s commitment. To a lawyer, judge or legal expert every commitment or obligation must be based on certain legal principle or legal theory. Therefore, from the beginning of the nineteenth century, various legal theories have been advanced to explain, to define or to justify the legal basis of the obligation. Majority of these theories have been based on the traditional legal principles such as law of contracts, law of negotiable instruments. In many cases judges justify the obligation simply assuming that the obligation has come out of contractual relationship between the parties. Careful study of these theories reveals that all these theories have come out of the misperception and misunderstanding of the nature and function of letters of credit. Some of these theories have advanced by ignoring the fundamental purpose of letters of credit. These theories, eventually, may create many problems to the smooth functioning of the successful instrument rather than to solve the puzzle of legal basis.In fact, the obligation neither based on the law of contract nor based on the law of negotiable instruments; the obligation is of unique nature and based on the repetitive and continuous practices of the merchant ie trade usage. However, there is no option to think that the practice has no legal sanction. The practice, on passing the difficult tests of reasonableness, certainty, continuity, and binding effect, has become an enforceable usage. Judicial notice or judicial recognition of the enforceable usage has conferred upon it with the authority of law. Thus the issuing bank is legally binding to honour the draft of the beneficiary.
An overview of truck and bus safety: 1999 Knoxville symposium
This paper presents a summary of the topics and discussions from the Second International Truck and Bus Safety Symposium held in Knoxville, Tennessee, October 6-8, 1999. This paper is not a technical paper but is based on the symposium proceedings, which can be accessed for more technical information. The symposium provided an opportunity for the many stakeholders in truck and bus safety, such as carriers, shippers, inspectors, law enforcement officials, insurers, regulators, manufacturers and researchers, to network and discuss the key issues associated with truck and bus safety.