INTL1320P International Trade Finance

INTL1320P International Trade Finance

Question

Answered

Task
Only have to attempt the second question, the answer should be 1500 words
Case Study 4: Christie Productions
Christie Productions have requested their bank to issue a commercial standbycredit to a new supplier, Metal Proofs, USA for the sum of USD 153,724 to secure their payment obligations in respect of the purchase of a variety of products for this total value. These will be delivered in four shipments over the next 2 months. (The product mix may vary in each shipment)If successful, the order will be repeated.
 
A payment term of 60 days from the date of shipment has been agreed. Trade will take place on open account. Upon shipment of the goods, an invoice and shipping documents will be sent to Christie Productions by the supplier, Metal Proofs. This will allow the clearance and use of the goods by Christie Productions prior to the invoice payment due date.
 
If Christie Productions fail to settle an invoice when due for payment, a claim will be made by the beneficiary, Metal Proofs, under the standby later of credit to demand the unpaid monies from the nominated or issuing bank.
 
A standby letter of credit facility has been established by the issuing bank in the name of Christie Productions. The supplier, Metal Proofs, have provided a draft wording of the standby credit to Christie Productions. 
Question:
1. What are the risks for Christie Productions?
 
2. What are recommendations for Christie Productions?