Red clause L/C
A letter of credit provision allowing the beneficiary to draw partial advance payments under the credit. This provision in used to be set out in red ink, therefore red clause designation. Generally, the beneficiary is only required, in order to receive the payment of the authorize advances, to present drafts along with a statement that the shipping documents will be provided in due time. Liability is assumed by the issuing bank rather than the correspondent bank. See letter of credit.