文档介绍：DOCUMENTARY LETTERS OF CREDIT
Gevil H. Sharp
October,2010
This article will provide the exporter, importer and others engaged in international trade with a practical guide to documentary letters of credits, commercial letters of credit or just letters of credit, as they will be referred to in this article, play an integral part in facilitating international trade while providing a secure and reliable means of article is not intended to provide legal or other professional advice and readers should not act on information contained herein without seeking specific advice on the particular transactions with which they are its limitations, it is hoped that this article will serve as a basic tool in understanding letters of credit.
In simple terms, a letter of credit is a bank undertaking of payment separate from the sales or other contracts on which it is based. It is a way of reducing the payment risks associated with the movement of goods. Expressed more fully, it is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request, and in accordance with the buyer’s (applicant) instructions to effect payment — that is by making a payment, or by accepting or negotiating bills of exchange (drafts) — up to a stated amount, against stipulated documents and within a prescribed time limit.
The need for a letter of credit is a consideration in the course of negotiations between the buyer and seller when the important matter of method of payment is being discussed. Payment can be made in several different ways: by the buyer remitting cash with his order; by open account whereby the buyer remits payment at an agreed time after receiving the goods; or by documentary collection through a bank in which case the buyer pays the collecting bank for account of the seller in exchange for shipping documents which would include, in most cases, the document of title to the goods. In the aforementioned met