Letter of credit important in trade transactions

Letter of credit important in trade transactions

The agreement often calls for transferring the amount to the seller directly, who, in turn, dispatches the consignment of goods to the buyer.



The trade establishment complaints section at the Department of Economic Development-Dubai (DED) often receives complaints after deals are entered into between dealers.
In most cases, a trader enters into a deal with another to purchase goods against payment of an agreed sum of money. The agreement often calls for transferring the amount to the seller directly, who, in turn, dispatches the consignment of goods to the buyer, said Abdul Latif Al Marzouki, senior director of business awareness section.
"In many cases the seller receives the amount but fails to send the consignment. This prompts the buyer to reach out to the complaints sections. "He comes to us claiming he has incurred losses," said Al Marzouki.
Trade contracts have to be drawn up, warned Al Marzouki. They have to be rightly worded. Both parties should be aware of the contents of the contract and they should be properly signed and attested leaving no room for ambiguity.
The best way to transfer money between traders is by opening a letter of credit at the bank. This will enable both parties to secure their transactions.
"When a letter of credit is opened, the buyer can deposit the amount at the bank and the bank and this will guarantee the rights of both parties." The bank will inform the seller that the buyer has deposited the money.
"Once the seller delivers the goods to the buyer and he is satisfied with the quantity and quality, the bank will transfer the due amount to the seller as per the deal. Whether the payment has to be made immediately after the goods have been delivered or after a certain period of time will depend on the clauses agreed up on by the two parties.
Letters of credits guarantee the financial rights of both parties, and help them from incurring financial losses in case one party violates the terms and conditions of the contract," he added.
Consumer friendly index key to success
Trade establishments always endeavour to provide the best services and distinctively excel in showcasing the best products with the aim of gaining customer satisfaction, said Adel Al Hilou, consumer protection expert at the DED.
"We at the Commercial Compliance and Consumer Protection Sector (CCPS) aim at cementing the relationship between the consumer and the trader, and work to regularise the relationship between the two through awareness workshops and by looking into complaints that come from both consumers and traders," he said.
The CCPS has launched the consumer-friendly establishments index designed to encourage merchants to offer their best services.
"There are several consumer-friendly establishments in Dubai and they are grouped into several categories under the trade establishments. These establishments vie with each other to win the Best Trade Establishment Award," said Al Hilou. The contending establishments are evaluated in terms of the quality of product and service; product and service price; financial value for the product price; satisfaction of after-sale service; clarity of the policies pertaining to the service and the warranty as well as overall satisfaction.
A neutral company will conduct and carry out a study by communicating with consumers and getting their opinion about the trade establishments in question. The best establishment will in turn be honoured. "The main objective of the consumer-friendly establishments index is to create a competitive, honest and positive environment among traders, to advice them to provide the best services and subsequently to increase consumers' trust and confidence in traders and investors," he added.
It is worth mentioning that winners of the award are honoured by top government officials, and the media in turn publishes the names of winners, which is an added bonus to the trader, he added.
14 vendors booked in 'Twilight' crackdown
As many as 14 persons have been issued tickets for practicing trade activities by the roadside contrary to the rules enforced by the DED.
A three-inspector-team from the field control section, who were on night duty, issued the tickets to the 14 people including vendors selling items to motorists and passers-by on Bypass Road.
"The crackdown code-named 'Twilight campaign' was launched on Emirates Road, formerly known as Bypass Road, according to a proposal by an inspector, who later took part in the campaign after he noticed vendors selling products and providing services to the public in a way contravening the law," said Ahmed Al Awadhi, senior director of field control Section.
Those booked, he said, were found selling diesel and fodder while some others were repairing heavy duty trucks and cars.
"Trade activities are subject to standards and criteria, and many of these require the approval of the competent authorities, so they can be supervised," he said.
"Some of these people even equipped their vehicles with pumps and hoses to supply fuel to motorists in need," he said.
"Consumers should cooperate with the authorities and should not take help from these unscrupulous traders," he urged.


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