Parties To A Letter Of Credit
- Depeding on the circumstances, various names used in a letter of credit may refer to the same party.
- The Applicant opens the letter of credit.
- The buyer, or customer, is the Applicant.
- Sometimes the Applicant is called the account party.
- The Opening Bank issues the letter of credit.
- The Opening Bank's credit replaces the buyer's credit.
- The Advising Bank is an agent of the Opening Bank.
- Verifies the authenticity of the Opening Bank.
- The Confirming Bank is usually the Advising Bank, but it confirms that the credit exists.
- It can negotiate the documents, and can accept the letter of credit the Opening Bank will not pay.
- The Paying Bank is also called the drawing bank.
- The Paying Bank may act also the Advising Bank, or the Confirming Bank, or the Opening Bank.
- The Beneficiary is often the seller.
- It is party to whom the credit is issued.
© 2004 John Michael Pierobon