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How to Cite
Letter of Credit and its Significance in International Commerce
Abstract
In the world of commerce and trade, trust and confidence form the basis of transactions. However such confidence cannot be left at the discretion and conduct of the parties thereto. It necessarily requires a prudent device or mechanism to materialize the process aptly. The international trade requires a fair, safe and speedy system of delivery and payment as its necessity. The parties in business especially in international business are usually not known to one another and hardly come across. All the agreements between them may mainly be made electronically while sitting far apart. In order to achieve the goal, an instrument popularly called “Letter of Credit” came into existence and developed accordingly with the passage of time and needs of commerce. The said instrument ensures the delivery of goods or services as well as the payment in consideration there of safely and simultaneously. The corresponding banks act as agents for the respective parties and payments are release on production of original documents called Bills of lading which are generally negotiable and play a dynamic role in international trade and commerce. In this paper, an attempt has been made to study the significance of the said instrument of documentary credit called letter of credit (L/C).
Authors
Qamar Abad
Lecturer, School of Law, University of Karachi, Sindh, Pakistan
Ghulam Murtiza
Assistant Professor, School of Law, Government College University, Faisalabad, Punjab, Pakistan
