The L/C (Letter of Credit, L/C), refers to the issuing bank should the applicant of the request and according to the instructions to a third party to open with a certain amount, in a certain period of time with in accordance with the payment of the shipping documents specified in the written guarantee files. The l/c is the most important, the most commonly used in international trade payment.

In international trade, buyers and sellers may distrust, worried that after the advance payment by the buyer, the seller to ship the goods not in accordance with the contract requirements; The seller also worry on delivery or submit shipping documents after the buyer don't pay. Therefore need two Banks as buyers and sellers of the guarantor, on behalf of the collection/p, in bank credit instead of commercial credit. Banks in the event the tool is used by the l/c.

Main contents:

(1) the l/c itself. As the types, properties, expiration and location.

(2) the demand for the goods. Described according to the contract.

(3) the demand for transportation.

(4) the requirement for the documents, the cargo documents and transport documents, insurance documents and other relevant documents.

(5) special requirements.

(6) the issuing bank to the beneficiary and holder guarantee payment of the bill of the clause.

(7) to the most abroad all filling: "unless otherwise specified, the certificate according to the uniform customs and practice for documentary credit international chamber of commerce or the international chamber of commerce publication no. 600 (ucp600 art.4) to deal with."

(8) bank wire transfer between claim terms (T/T Reimbursement Clause).

Main features:

A, l/c is not attached to the sales contract, the bank is emphasized in the examination of documents of l/c and basic trade in written form of authentication phase separation;

Second, the l/c is the payment voucher, don't will be subject to the goods. As long as the documents, the issuing bank should be unconditional payment;

Third, the l/c is a kind of bank credit, it is a kind of bank guarantee files.