2.0 METHODOLOGY 2
3.0 LITERATURE REVIEW 3
4.0 FINDINGS 4
4.1 Introduction – What is Letter of Credit 4
4.2 Parties to Letter of Credit 5
4.3 Should Letter of Credit be chosen as the Payment Method? 6
4.4 Types of Letter of Credit 6
4.4.1 Irrevocable 7
4.4.2 Unconfirmed 7
4.4.3 Confirmed 7
4.4.4 Standby Letter of Credit 7
4.4.5 Revolving Letter of Credit 8
4.4.6 Transferable Letter of Credit 9
4.4.7 Back to Back Letter of Credit 9
4.5 Documents Required By Letter of Credit 9
4.6 Governing Rules under Letter of Credit 10
4.6.1 Uniform Commercial Code (UCC) 10
4.6.2 Uniform Custom and Practice for Documentary Credits (UCP) 10
4.6.2.1 ICC and the UCP 11
4.6.2.2 Who can become a member of ICC? 12
4.7 Autonomy of Letter of Credit 12
4.8 Doctrine of Strict Compliance 13
4.8.1 Definition - Doctrine of Strict Compliance 14
5.0 Case Study 17
UNITED BANK LTD. v. BANQUE NATIONALE DE PARIS & ORS. 17
6.0 Conclusion 19
INTRODUCTION
Letter of credit is a commercial device involving three parties: the issuer (usually a bank), the customer and the beneficiary. The customer, in essence, buys the letter of credit from the issuer. That is, the customer pays a fee for the issuance of the letter of credit and agrees to be responsible to the issuer for reimbursement of any funds which the issuer pays to the beneficiary. The issuer is then bound to honor the demand of the beneficiary for payment of the letter of credit, as long as the demand is in compliance with the conditions of the letter of credit, including presentation of appropriate documents. (D. Brinkman., 1997)
Letters of credit have increasingly become the first and last resort for many credit executives attempting to eliminate transaction risks, and they are essential to both domestic and international trade. Letters of credit are particularly important to international commerce. A letter of credit is a commercial device involving 3 parties: 1. the issuer, 2. the customer,
Bibliography: 1. http://en.wikipedia.org 2. www.sitpro.org.uk 3. International and Comparative Trade Law, S. Johan, University of Uppsala, 2004. 4. UCP 600 5. http://www.iitk.ac.in/ime