Green Clause

Green Clause

A clause in a letter of credit allowing one to take out an advance loan before a shipment is sent if one puts up some collateral, often demonstrated by warehouse receipts. For example, a farmer may utilize a green clause to receive financing for operations, using his crops in a warehouse as collateral. A green clause is most common in contracts relating to agricultural commodities.
References in periodicals archive ?
Furthermore, investors may seek penalties for a green default, whereby a bond is paid in full but the issuer breaks agreed green clauses.