Law/Jurisdiction Clause

A clause in the Guarantee, Counter-Guarantee or Counter-Indemnity nominating the governing law of the guarantee and the courts of the country which will rule in the event of a dispute between the parties to the guarantee.

Lease

A legal right to occupy and use a property for a defined period. Granted by the freeholder. For property, the original lease is sometimes called the 'head lease'.

Lease Purchase

A type of finance agreement which includes an option for you to buy the goods at the end of the hire period. It is also known as Hire Purchase. 

Leasing

A contract between a lessor (i.e. HSBC) and a lessee (a business customer). Under a leasing agreement, the lessor purchases an asset and makes it available to the lessee for an agreed period in exchange for rental payments. During that period, the lessee has use of the asset. Title (ownership) of the asset remains with the lessor (HSBC) at all times, both during and at the end of the contract, however, most of the risks, rights and obligations of ownership rest with the lessee (the customer). The asset normally appears on the lessee's business balance sheet as a Fixed Asset. See also Operating Lease or Finance Lease.

Legacy currency

The currency of one of the 12 Eurozone countries, used prior to the introduction of the Euro. These 12 currencies ceased to exist on 1 January 2002.

Legal Expenses

This cover provides the business with protection in the event of Employment Disputes, Compensation Awards, Legal Defence etc.

Lessee

The hirer or user of the equipment being leased. See also Leasing.

Lessor

Someone who can bestow the benefits of ‘quiet ownership’. Need not necessarily be the owner of the asset in the legal sense. See also Leasing. 

Letter of Credit

Another term used to describe a documentary or standby letter of credit.

Letter of Hypothecation

An agreement between the bank and a customer which allows the bank to hold goods or other tangible assets as security for a specific transaction(s).

Liabilities

Monies owed by the business to outside parties.

LIBOR (London Interbank Offer Rate)

London Interbank Offer Rate. The rate at which a bank will lend funds to another bank.

Life Assurance

A policy that pays out when an event happens that is certain to happen at some point (e.g. death!). Contrasts with 'insurance', which is cover against an event which may not happen.

Limited Company

A company which is incorporated in the UK. This means it has a separate legal existence from those who founded it. The 'limited' refers to the fact that liability of the directors and shareholders are limited to the company assets except where specific personal guarantees are provided (unless an offence has been committed in the conduct of the company management).

Liquid

In market terms this means easily convertible, to cash or another instrument.

Liquidity

The ability or ease with which a business or an individual can convert their possessions or assets into cash.

Live Price

A dealing price which can be used to make a transaction.

Loan Against Imports (LAI)

Loan used to settle trade documents - granted against submission of a loan bond and trust receipt pledging title of the goods to the order of the bank in the event that the loan is not repaid at maturity.

Loan Covenants

An undertaking as a condition of a loan. For example, a covenant on a loan states that “a minimum total asset value of £100,000 must be maintained at all times”. This means that the borrower must have a total asset value of at least £100,000 at all times or they will have broken the covenant and the lender could then ask for immediate repayment of the loan.

Loan Guarantee Scheme

As Small Firms Loan Guarantee Scheme. 

Local Agent

The overseas representative of the Applicant who is used to identify new business opportunities for the Applicant and to ‘trouble-shoot’ any problems encountered in the performance of contracts.

Local Issue

A requirement of the Beneficiary for a bank in their country to issue the Guarantee. 

Lockbox

A service which allows business customers to outsource the collection and processing of postal receipts (cheques, credits and correspondence) such as utility bill payments.

Long Term Liabilities

Loans made to the business but not due to be paid back within the next year. Capital is a form of long term liability.