The issuing bank examines all the documents and pays the seller in the manner of a Letter of Credit.Advising bank transfer all the documents to the issuing bank.Then the seller will obtain all the required documents to present the advising bank or confirming bank.
After receiving the Letter of Credit, the seller shipped the goods to the buyer as per the terms which are underlying in the sale of the contract.After approving the LC application, Bank issued the Letter of Credit to the seller’s bank (advising bank).The buyer applies to his bank (issuing bank) to open a Letter of Credit in favor of the seller.The contract between parties for the sale of goods.The stages of forming a letter of credit are given below. The letter of credit is termed as the lifeblood of international commerce because of its popularity and it is a widely recognized framework of ICC known as ‘Uniform Customs and Practices for Documentary Credit’ publication number 600. The letter of credit is the most popular transaction in the international trade in Bangladesh because under this the risk is distributed in a balanced way between the exporters and importers, on the other hand, the exporters take the credit from the bank so there is no chance of fraud by the buyer. Chartkar 54 DLR (AD) 2002,Appellate Division held that “a letter credit is independent and unqualified by the contract of sale or underlying transaction. Letter of credit is an undertaking issued by a bank on behalf of the buyer (who is the importer) to the seller (exporter) to pay credit for the goods and services provided and upon presentation of the documents the bank is bound to provide the credit if the documents comply with the contract terms and condition. This paper will be a focus on the letter of credit. Therefore a secured transaction mechanism is preferred.There are many ways of secured transactions in international trade like Cash in Advance or Prepayment, Documentary Collection, Documentary Credit or Letter of Credit and others. Globally the volume of transactions is increasing day by day in the international trade area. By: juralacuity / 0 comment Legal Position of Letter of Credit in Bangladesh
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