Unconfirmed Letter of Credit

An Unconfirmed Letter of Credit (L/C) is a financial document backed solely by the issuing bank. The seller bears more risk due to the lack of guarantees from any additional banks.

Issuing Bank: Provides the letter of credit, guaranteeing payment to the seller.

Beneficiary: The seller or exporter who receives the payment.

Applicant: The buyer or importer who requests the letter of credit.

Currency: The specified currency in which the payment will be made, such as USD, GBP, or EUR.

Expiration Date: The last date on which the letter of credit is valid.

Amount: The exact monetary value specified in the letter of credit.

Conditions: The specific terms and conditions that must be met for the issuing bank to release funds, such as shipping documents or proof of delivery.

Example: An American importer (Applicant) requests an L/C from a U.S. bank (Issuing Bank) for goods purchased from a Chinese exporter (Beneficiary). The L/C specifies a payment of $50,000 upon receipt of shipping documents proving the goods have been dispatched.