Académique Documents
Professionnel Documents
Culture Documents
Letter of credit
It is a way of reducing the payment risks associated with the movement of goods. Letters of credit are often used in international transactions to ensure that payment will be received.
o Why use a letter of credit - the use of letters of credit has become a very important aspect of international trade.
Due to the nature of international dealings including factors such as o distance differing laws in each country & difficulty in knowing each party personally
Letter of credit
Types of LOC there are five commonly used
type of letter of credit. Each has different features & some are more secure than others. The most common types are: 1- Irrevocable 2- Revocable 3- Unconfirmed 4- Confirmed & 5- Transferable
Types of LOC
Irrevocable
Revocable
TYPES OF LOC
confirmed
transferable
unconfirmed
1
Purchase & sales agreement
Seller/exporter
2
Request for letter of credit
4
Advise of letter of credit
3
Request to advise & possibly confirm the letter of credit
Issuing bank
Advising/confirming bank