Answer-What is a 'Red Clause Letter of Credit'?

The Red Clause originally written in red ink permits the beneficiary to avail an advance for purchasing raw materialspacking before the actual shipment.

Question

What is a 'Red Clause Letter of Credit'?

A An LC that has been canceled.

B An LC that allows the seller to take a pre-shipment advance from the advising bank.

C An LC used for importing hazardous chemicals.

D An LC that requires the seller to provide a 50% discount.

E An LC that is non-transferable.

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What is a 'Red Clause Letter of Credit'?

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