Payment terms for Nigerian sesame: what we offer and why.

The two structures we quote

We trade on one of two payment structures, settled in writing before a quotation is issued rather than argued afterwards:

• —30% advance payment, with the balance of 70% against an irrevocable letter of credit at sight
• —100% by irrevocable letter of credit at sight, issued by a recognised bank

Which of the two applies to my order?

Whichever the two of us agree. The choice is a matter of mutual understanding between buyer and seller, and it turns on the things that always decide payment terms in this trade: whether we have traded together before, the size and tenor of the programme, the bank standing behind the credit, and the destination. A first container to a new counterparty and a fourth shipment on a running programme are not the same commercial risk, and pretending otherwise helps nobody.

What does not vary is that the term is written into the sales contract before we quote a price. A payment term agreed after a price is agreed is a renegotiation, and a payment term left vague is the single most common reason a first trade stalls.

What does "irrevocable" actually mean under UCP 600?

It means the credit cannot be amended or cancelled without the agreement of the parties to it, and under the current rules it is not an optional feature you have to ask for. UCP 600 defines a credit at Article 2 as "any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation", and Article 3 states plainly that "a credit is irrevocable even if there is no indication to that effect".

So under UCP 600 the word "irrevocable" in our terms is, strictly, redundant — every credit governed by these rules already is. We write it anyway, for two reasons worth knowing rather than taking on trust. The first is that the rules only apply when the credit says they do: Article 1 provides that the UCP apply to a credit "when the text of the credit expressly indicates that it is subject to these rules". A credit that is silent on UCP 600 is not governed by it, and then the older distinction between revocable and irrevocable credits is live again. The second is that it removes an ambiguity at no cost, which is the whole business of contract drafting.

The practical instruction that follows: check that the credit itself says it is subject to UCP 600. That single line is what makes everything else on this page apply to your transaction.

What does "at sight" mean, and what does it not mean?

It describes when the bank pays, and nothing else. A credit must state how it is available — Article 6(b) requires that it "state whether it is available by sight payment, deferred payment, acceptance or negotiation" — and where it is available by sight payment, Article 2 defines the bank's obligation to honour as "to pay at sight".

What it does not mean is payment on arrival, on inspection at destination, or on your satisfaction with the cargo. Two provisions decide this and they are the ones first-time buyers most often discover late. Article 4(a): "a credit by its nature is a separate transaction from the sale or other contract on which it may be based". Article 5: "banks deal with documents and not with goods, services or performance to which the documents may relate."

That separation cuts both ways, and it is the reason the specification and the inspection basis have to be right in the contract. A credit will pay against documents that comply with the credit even if you are unhappy with the seed, and it will refuse documents that are perfect in substance but wrong in wording. Quality is protected by the contract's quality, sampling and analysis clauses — not by the credit.

Why "from a recognised bank"?

Because a credit is worth exactly what the bank behind it is worth. The issuing bank's undertaking is the security a seller is accepting in place of cash, so a credit from an institution we cannot assess is not the same instrument as a credit from one we can, whatever its text says.

"Recognised bank" is our commercial wording, not a term defined in the ICC rules, and it is worth being straight about that. In practice it means an established commercial bank whose standing can be checked and whose credits are routinely handled by the correspondent banking chain. Where the issuing bank is unfamiliar to us, the ordinary remedy is confirmation: a second bank acceptable to us adds its own undertaking to the credit, which UCP 600 addresses at Article 8. Confirmation costs money and the contract should say who pays for it.

What makes a letter of credit fail to pay?

Almost never a dispute about the goods. Overwhelmingly it is a document that does not match the credit, which the rules call a presentation that does not comply — and Article 16(a) allows the bank to refuse to honour when it determines that a presentation does not comply.

"Complying" is a demanding standard: Article 2 defines a complying presentation as one "in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice". A document correct in substance but differing in wording from the credit is a discrepancy, and a discrepancy is grounds for refusal. Money is lost in this trade to typing.

• —A credit that calls for a document nobody at origin can obtain, or names an issuer that does not issue it
• —A shipment window the crop calendar cannot meet — new-crop Nigerian sesame arrives from late November
• —Names, marks, weights or descriptions that differ between the credit, the invoice and the bill of lading
• —A document dated outside the period the credit allows
• —An expiry or presentation period too short for documents to be assembled and presented from Lagos

How long do the banks have, and how long do we have?

Two deadlines govern the mechanics and both are in Article 14. Each bank examining the documents — a nominated bank acting on its nomination, the confirming bank if there is one, and the issuing bank — has "a maximum of five banking days following the day of presentation to determine if a presentation is complying" under Article 14(b).

The seller's deadline is Article 14(c): a presentation including one or more original transport documents must be made "not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit". Both limbs bind. A credit whose expiry falls inside that window shortens it, which is why the expiry date and the shipment window are read together against the sailing schedule before the credit is issued rather than after the vessel sails.

What about cash against documents, or payment by transfer?

They exist and they are common in this trade, but they are not what we quote, so this page will not pretend otherwise. Cash against documents — documents against payment — runs under a different ICC rulebook, the Uniform Rules for Collections, ICC Publication No. 522, in force since 1 January 1996. Under a collection the banks pass documents and instructions; they do not undertake to pay you, which is the whole difference from a credit and the reason it is the customary basis on the FOSFA sesame forms between counterparties who already know each other.

A straight telegraphic transfer in full and in advance is the seller's ideal and almost never the buyer's, which is why our first structure splits the difference: an advance that commits the buyer to the lot being bought and prepared at origin, and a credit that protects the balance against documents.

What should I do before agreeing a payment term?

Four things, in this order, and none of them takes long:

1. 01Agree the payment structure in writing with the specification and the Incoterm, before a price is quoted
2. 02Confirm the credit states that it is subject to UCP 600, without which none of the articles above govern it
3. 03Read the credit's document list against what origin can actually issue, and reconcile it with the contract's document list before it is issued
4. 04Check the shipment window and expiry date against the crop calendar and the sailing schedule, allowing for the 21-day presentation period

How current is this page?

The payment terms are the owner's, as at 10 September 2026. Every quotation of UCP 600 above was read off the rules text itself — Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600 — and checked a second time against ICC's own digital library, with the article number given so you can verify it rather than take our word for it.

One deliberate omission: the date UCP 600 came into force is not stated here. It is widely given as 1 July 2007, but neither source we consulted states it, and this site does not print a date it has not seen. Payment terms are commercial and can change; the article numbers will not, unless the ICC revises the rules.