Documentary Credit, Letter of Credit
Documentary Credit is the officially correct term for Letter of Credit. The UCP500 only mentions "Documentary Credit" not "Letter of Credit".
Letter of Credit
A conditional order in writing, issued by a buyer's bank, guaranteeing to pay the seller upon presentation of stipulated documents, strictly in accordance with the credit. It is strongly recommended that every exporter and importer has a copy of the "Uniform Customs and Practice for Documentary Credits", International Chamber of Commerce publication 500. These are available from most major Chambers of Commerce, or from us at AUD 20.00 including postage, handling and GST, to Australian addresses only.
Letter of Credit - Confirmed
A letter of credit which has been further guaranteed by a local bank generally in the exporter's country.
Letter of Credit - Irrevocable
A credit which cannot be revoked, cancelled or amended unless the beneficiary agrees. Virtually all L/Cs issued under UCP500.
Letter of Credit - Discrepancy
Where a document does not comply strictly with the terms and conditions of an L/C.
Letter of Credit - Under Reserve
Where documents with discrepancy/ies are nevertheless negotiated against an L/C, and the negotiating bank reserves the right to take back the funds from the exporter if the discrepancy is not acceptable to either the buyer or the L/C issuing bank.
