Chapter 11 Methods of Payment（2）—Letter of Credit ...
Learning Objectives:
◆An introduction to and a definition of letter of credit
◆Participants,flowchart and characteristics of a transaction by letter of credit
◆Exporter’s task under a transaction by letter of credit
◆Major types of letter of credit
As explained in Chapter 9,security of goods and payment in international trade is an issue that obsessed both importer and exporter.As exporter,you may reason,“If a bank in the importer’s country could help me collect the money,that would be better”,which is precisely the logic behind a documentary collection.However,under this arrangement,the banks involved do not guarantee to acquire the money for you,but only work as agents and follow your instructions.Then you may wish the banks play a more responsible role.So does the importer.Such thinking leads to the innovation of a letter of credit(L/C),which safeguards both money and merchandise in an ingenious way.In this chapter,we’ll be exploring its rationale and workflow—though it is not an intuitive process at first encounter,I will try to make it accessible to beginners like you.