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Documentry letters of credit
What is a Documentary Letter of Credit (LC)?
A Documentary Letter of Credit is a written undertaking by a bank (issuing bank) on behalf of the buyer to pay the seller a specified amount, provided the seller presents documents that comply strictly with the terms and conditions of the LC.
What is the issuing bank's primary obligation in a Letter of Credit?
To pay the beneficiary upon presentation of compliant documents.
Which international body publishes the rules governing Documentary Letters of Credit?
The International Chamber of Commerce (ICC) publishes the Uniform Customs and Practice for Documentary Credits (UCP 600), which is the primary ruleset governing Documentary Letters of Credit worldwide.
What is the applicant's role in an LC transaction?
The importer who requests the bank to open an LC in favour of exporter.
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