CHAPTER 13 - BENEFITS OF DOCUMENTARY CREDIT

General

·         It is an irrevocable and unconditional undertaking of a bank (Issuing Bank).

·         Issued at the request of the applicant (buyer).

·         To make payment to the beneficiary (seller).

·         On presentation of documents complying with the terms and condition of the credit, UCP & ISBP.

Benefits to the Applicant

·         Provides assurance to the applicant (buyer) that payment will be released only on presentation of credit compliant documents.

·         Financing facilities from the Bank.

Benefits to the Beneficiary

·         Gives assurance to the beneficiary (seller) that payment will be made if complying documents are presented.

·         Risk of default or non-payment is shifted from the buyer to the issuing bank.

·         Control of goods rests with the Bank.

·         Financing facility from the Bank.