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Can the documentary credit replace a sales contract?

April 26, 2017contract credit Documentary replace sales

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Can the documentary credit replace a sales contract?

1 Answer

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No. Documentary credits, by their nature, are separate transactions from the sales or other contracts on which they may be based (UCP Art. 4). Any complaints or disputes therefore have to be settled directly between the buyer and the seller outside the documentary credit. The documentary credit is an instrument designed to reflect the payment and delivery terms specified in the sales contract.