Documentary credit is a payment mechanism used in international trade to ensure timely and secure payment for goods or services. It involves an undertaking by a bank, known as the issuing bank, to pay a specified amount to a beneficiary, usually the seller, upon presentation of complying documents. The workability of a documentary credit depends on the clarity and completeness of its terms and conditions, which should be aligned with the underlying sales contract. Applicant and Beneficiary Details The documentary credit should clearly identify the applicant, who is the buyer or importer, and the beneficiary, who is the seller or exporter. The details should include their full names, addresses, and any other relevant contact information. Documentary Credit Amount and Tolerance The documentary credit should specify the currency and amount of the credit. It may also include a tolerance, which allows for a certain percentage of variation in the amount or quantity of goods shipped. Partial...
Documentary credit is a payment mechanism used in international trade to ensure timely and secure payment for goods or services. It involves an undertaking by a bank, known as the issuing bank, to pay a specified amount to a beneficiary, usually the seller, upon presentation of complying documents. The workability of a documentary credit depends on the clarity and completeness of its terms and conditions, which should be aligned with the underlying sales contract. Applicant and Beneficiary Details The documentary credit should clearly identify the applicant, who is the buyer or importer, and the beneficiary, who is the seller or exporter. The details should include their full names, addresses, and any other relevant contact information. Documentary Credit Amount and Tolerance The documentary credit should specify the currency and amount of the credit. It may also include a tolerance, which allows for a certain percentage of variation in the amount or quantity of goods shipped. Partial...