Entering into a commercial or financial transaction always involves certain risks for the seller or the financier. The most serious risk is that of not being paid. There are many methods available to help ensure payment. One such method is through the use of a letter of credit. The letter of credit substitutes the credit of a third party, usually a bank, for that of the buyer or debtor. In transactions in which a commercial letter of credit is used, the bank agrees to pay the seller for the goods sold, usually upon presentation of a document stating that the goods have been received by the buyer. In transactions in which a standby letter of credit is used, the bank agrees to pay the financier if the debtor defaults upon his obligation to pay. In both cases, the seller or financier is assured of payment, provided the conditions of the letter of credit are satisfied. Upon payment by the bank, the buyer or debtor is obligated to reimburse the bank. Three legal relationships exist in a...
Martin Burn (IOM) Limited is a leading Financial Services firm that is headquartered in Isle of Man to provide Personal Loan, Business Loan, SME Loan, Investment Loan, Project Financing, Bank Guarantees, SBLCs, Letters of Credit, Monetization of BG/SBLC and funding for all kinds of viable projects locally and internationally.