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    Question

    Which of the following scenarios best explains the

    difference between Green Clause and Red Clause Letter of Credit?
    A Green clause requires performance guarantee, red does not Correct Answer Incorrect Answer
    B Red clause allows advance to seller, green clause adds warehousing documents Correct Answer Incorrect Answer
    C Red clause offers no advance payment, green clause does Correct Answer Incorrect Answer
    D Green clause is only for government purchases Correct Answer Incorrect Answer
    E Both are used in credit cards Correct Answer Incorrect Answer

    Solution

    • Red Clause L/C: Allows advance to exporter before shipment • Green Clause L/C: Same as red but includes warehouse receipts Thus, (b) explains it accurately.

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