📝 One-liners · 65 cards
LETTER OF CREDIT
What is a Letter of Credit (LC) in the context of international trade?
A Letter of Credit is a written undertaking issued by a bank (issuing bank) on behalf of its customer (applicant/importer) promising to pay the beneficiary (exporter) a specified amount upon presentation of stipulated documents within a defined period.
What is the primary purpose of issuing a Letter of Credit in international trade?
To provide payment assurance to exporter from a bank.
Who are the four main parties involved in a Letter of Credit transaction?
The four main parties are the Applicant (importer/buyer), the Issuing Bank (buyer's bank), the Beneficiary (exporter/seller), and the Advising Bank (correspondent bank in the exporter's country).
Who is the 'applicant' in an LC transaction?
The buyer or importer who requests the LC issuance.
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