L/C characteristics

- May 15, 2018-

L/C characteristics

There are three characteristics in the way of letter of credit:

First, the letter of credit is a self contained document (self-sufficient instrument). The letter of credit does not depend on the sale and purchase contract. When the bank examines the bill, it emphasizes the written form of certification between the letter of credit and the basic trade.

Two, the letter of credit is pure documentary transaction. The letter of credit is paid by the voucher. It is not subject to the goods. As long as the documents are identical, the issuing bank should pay unconditionally.

The three is the issuing bank's primary liabilities for payment. A letter of credit is a kind of bank credit. It is a guarantee document of a bank. The issuing bank is responsible for paying the principal payment.