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L/C</DIV> <DIV class=board><STRONG>What is the Letter of Credit? L/C Details</STRONG></DIV> <DIV class=hcontent> <DIV style="MARGIN: 20px auto" align=center> <H1>What is the Letter of Credit? L/C</H1></DIV> <DIV class=clear></DIV> <DIV class=pdbox> <DIV class=prodetaildes> <FONT face=Arial><FONT color=#08070a><EM>Letter of Credit was quite literally that - a letter addressed by the buyer's bank to the seller's bank stating that they could vouch for their customer, the buyer, and that they would pay the seller in case of the buyer's default.&nbsp;&nbsp;</EM><BR></FONT></FONT> <P><FONT face=Arial color=#08070a><EM>Nowadays, they are formatted to provide fill-in spaces for the various requirements of international or domestic business.&nbsp; It is written by a bank on behalf of one of it's creditworthy customer, who's application for the line of credit has been approved. Or have facilities, or whatever.</EM></FONT></P><BR> <P><FONT face=Arial color=#08070a><EM>The sequence of information on Letter of Credit the language used is determined by rules set by the INTERNATIONAL CHAMBER OF COMMERCE (ICC).&nbsp; The rules and language are very specific and cannot be changed, and are spelled out in the ICC's Uniform Customs and Practice for Documentary Credits.</EM></FONT></P><BR> <P><STRONG>The parties to a Letter of Credit are</STRONG>&nbsp;</P><BR> <P><FONT color=#339966><STRONG>The Buyer &nbsp;<EM>(the applicant)</EM></STRONG></FONT></P><BR> <P><FONT color=#339966><STRONG>The buyer's bank&nbsp;<EM>(the issuer)</EM></STRONG></FONT></P><BR> <P><FONT color=#339966><STRONG>The beneficiary <EM>(the seller/payee)</EM></STRONG></FONT></P><BR> <P><FONT color=#339966><STRONG>The beneficiary's bank.&nbsp;&nbsp;</STRONG></FONT></P><BR> <P>The LC outlines the conditions under which payment will be made to a third party (the beneficiary).&nbsp; The conditions are specified by the buyer and may include insurance forms, Way Bills, Bills of Lading, Customs forms, and various certificates . It is the responsibility of the issuing bank to ensure, on behalf of its client the buyer, that all documentary conditions have been met before the Letter of Credit funds are released.</P><BR> <P>In effect, a basic Letter of Credit is a financial contract between the bank, the bank's customer, and the beneficiary, and this contract &nbsp;-&nbsp;&nbsp; involves the transfer of goods or services against funds.&nbsp;</P><BR> <P>Not to be confused with the contract between the buyer and seller.&nbsp; The neither of the banks have any interest in that kind of contract.</P><BR> <P>The Letter of Credit may be written for a short period of time, covering one shipment of goods, or may be written for a greater amount and for a longer period of time in order to cover say, a year's worth of shipments</P> <DIV class=clear></DIV></DIV></DIV> <DIV class=clear></DIV> <DIV class=clear></DIV> <SCRIPT language=javascript type=text/javascript> function mover(m,n) { document.getElementById("hott_"+n).className="htit2"; 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