Page 123 - eBook: EXIM for Beginner
P. 123
Letter of Credit will PROTECT
• Seller protection: If a buyer fails to pay a seller, the
bank that issued a letter of credit must pay the seller
as long as the seller meets all of the requirements in
the letter. This provides security when the buyer and
seller are in different countries.
• Buyer protection: Letters of credit can also protect
buyers. If you pay somebody to provide a product or
service and they fail to deliver, you might be able to
get paid using a standby letter of credit. That payment
can be a penalty to the company that was unable to
perform, and it’s similar to a refund. With the money
you receive, you can pay somebody else to provide the
product or service needed.
