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Letters of Credit for Import

In: The Trade and Receivables Finance Companion

Author

Listed:
  • Stephen A. Jones

    (AXS Trade Finance Ltd.)

Abstract

A letter of credit is an undertaking to make payment at sight or on a future determinable date up to a specified value, usually given by a bank which is conditional on the receipt of documents which appear ‘on their face’ to comply with the terms of the credit and the applicable UCP rules. Letters of credit are used primarily when the seller and buyer do not have an established or trusted relationship. The conflicting needs of the seller and buyer result in differing requirements for the structure and terms of the letter of credit. This chapter discusses the optimum structure of the letter of credit to mitigate risk for the buyer and to provide a financing solution. The same trading scenario is also examined in Chap. 6 to illustrate the key differences in required structure between an import and export letter of credit.

Suggested Citation

  • Stephen A. Jones, 2019. "Letters of Credit for Import," Springer Books, in: The Trade and Receivables Finance Companion, chapter 5, pages 51-71, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-25139-0_5
    DOI: 10.1007/978-3-030-25139-0_5
    as

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