ABSTRACT
A letter of credit is a document from a bank guaranteeing that a seller will receive payment in full as long as certain delivery conditions have been met. Letters of credit are typically used by importing and exporting companies, particularly for large purchases, and will often negate the need for the buyer to pay a deposit before delivery is made". The sales contracts provided for payment via letter of credit, and the buyer failed to open the credit by the shipment period. Letters of credit used in international transactions are governed by the Uniform Customs and Practice for Documentary Credits (UCP). Domestic collections in the US are governed by the Uniform Commercial Code (UCC). The letter of credit is a distinct and separate transaction from the contract on which it is based. Letters of credit may often be, in practice, unclear in regard to the documentary requirements therein enshrined.
