What is a documentary letter of credit?
A documentary letter of credit (also known as a commercial letter of credit or a merchandise letter of credit) is a letter of credit that is issued for the purpose of making payment to a specified beneficiary if the beneficiary performs as required. Documentary letters of credit are called documentary letters of credit because the banks involved in the letter of credit transaction deal in documents as opposed to goods. The terms and conditions specified in a documentary letter of credit generally involve the presentation of specific documents within a stated period of time.
• A documentary letter of credit (also known as a commercial letter of credit or a merchandise letter of credit) is a letter of credit that is issued for the purpose of making payment to a specified beneficiary if the beneficiary performs as required. Documentary letters of credit are called documentary letters of credit because the banks involved in the letter of credit transaction deal in documents as opposed to goods. The terms and conditions specified in a documentary letter of credit generally involve the presentation of specific documents within a stated period of time.
A Documentary Letter of Credit (also known as a Letter of Credit) is a written undertaking given by a bank onbehalf of an importer to pay the exporter an amount of money within aspecified period of time, provided the exporter presents to the bank documents which strictly comply with the terms and conditions laid down in the Letter of Credit. Letters of Credit are subject to published worldwide standards defined by the International Chamber of Commerce – Uniform Customs and Practice for Documentary Credits (UCP). All parties dealing with Letters of Credit should be aware of and adhere to UCP. Letters of Credit conforming to UCP standards should bear the clause”Subject to Uniform Customs and Practice for Documentary Credits(Latest Version). The latest revision was published in July 2007 – UCP 600. A Letter of Credit can be issued for any amount and in any freelytraded currency. It must stipulate when payment is to be made to theexporter. It can be payable either: – At sight, ie: immediat
