A red clause letter of credit is similar to a letter of Credit which is written to state or confirm the availability of funds for a particular transaction between the seller and buyer. However, a clause is included in the letter stating that the stated amount or credit can be advanced immediately on showing the letter.

A Green Clause Without Collateral

IN red clause letter of credit the applicant(buyer)authorizes the confirming bank or any other nominated bank to pay a specified amount to the beneficiary.this clause was traditionally wriiten in red so it was called as red caluse letter of credit.

this type of lc would part finance the middle men r the dealers of the beneficiary and the buyer may be willing to have concessions on his pament.

this type of lc is hevily used in fur industry in China & Australia .

Scorpion Clause in L/C a clause which renders it impossible for the beneficiary, or seller, to fulfill the conditions of the letter separately and independently of the purchaser.

Red clause LC is a credit sample of swift format. In the swift format you will give detailed explanations about trade practitioners.