Assignment 2 Essay Example | Topics and Well Written Essays - 1000 words - 10

Assignment 2 - Essay Example The seller is afraid of nonpayment incidences while the buyer goods delivered will not conform to the order’s conditions. Coupled with the above-mentioned fears, it is the fact that legal recourse will be expensive besides sometimes being extremely complex taking jurisdiction into consideration. Mainly, they ease trading modes besides eliminating fears, which parties might be having especially when their merchandises emanate from other diverse regions other than where they operate from. The most occurring incidences regarding these letters not meeting the stated requirements are those of fraud, which this study intends to relate explicitly. Documentary letter of credit usually takes place between three or more parties. They include the claimant who is the buyer or one importing, issuing bank being the importers bank whereby the beneficiary may be the seller or exporter. This document may be electronically given the presented to a local bank of the owner’s choice willing to negotiate for it to negotiate for him or her. Bank mandated to give out the letter ensures it reaches to that of correspondent in the same region where the exporter might be operating. That of correspondent assumes the role of advising because its responsibility is to inform the beneficiary that the letter has already opened in his or her favor. Bank supposed to pay may deal with the beneficiary in terms of local currency though after determination of proper currency. The correspondent in advising or settling payments may need to include its name to the letter when it imposes charging fees. By completion of this procedure, the involved banks w ill settle their final dealings in an attempt to ensure they have served as necessitated. Mainly, the issuing bank ensures it settles the pending dues for the customer after he or she presents to it’s the necessary papers. Hence, the letter acts as a document to the client prepared adequately by the bank