Q.

DIFFERENCE BETWEEN BILL OF EXCHANGE AND LETTER OF CREDIT

(LC)
In brief, a "bill of exchange" or a "Hundi" is a kind of legal negotiable instrument used
to settle a payment at a future date. It is drawn by a drawer on a drawee wherein
drawee accepts the payment liability at a date stated in the instrument. The Drawer
of the Bill of Exchange draw the bill on the drawee and send it to him for his
acceptance. Once accepted by the drawee, it becomes a legitimate negotiable
instrument in the financial market and a debt against the drawee. The drawer may,
on acceptance, have the Bill of Exchange discounted from his bank for immediate
payment to have his working capital funds. On due date, the bill is again presented
to the drawee for the payment accepted by him, as stated therein the bill.

Letter of Credit (LC) is a declaration of financial soundness and commitment, by a
bank for its client, for the amount stated in the LC document, to the other party
(beneficiary) named therein. The LCs may or may not be endorse-able. In case of
default of payment by the party under obligation to pay, the LC issuing Bank
undertakes to honour the payment - with or without conditions. Normally, there may
be sight LCs or DA LCs containing a set of conditions in both the cases. There "may
be" Bills of Exchange(s) drawn under the overall limits of the LC amount for payment
later on.

LETTER OF CREDIT STANDBY VERSUS CONFIRMED LC:
LETTERS OF CREDIT- ADVISED vs. CONFIRMED

The letter of credit transaction usually involves two banks: the
buyer's bank issuing the letter of credit and a bank in the seller's
country, which advised the letter of credit to the beneficiary. The
advising bank may also assume the role of confirming bank.
Whether advising and/or confirming, the seller's bank assumes
certain responsibilities.

Advising

An advising bank acts as the agent of the issuing bank. The
function of the advising bank is to take reasonable care to verify the
authenticity of credits received and then accurately transmit them to
their beneficiaries. When advising a letter of credit, the bank
assumes no other liability. On receipt of the documents for
examination and payment, the advising bank will pay the seller only
if it has received good funds from the issuing bank, even if it was
specifically named as paying bank in the letter of credit.

Confirmation

By confirming a letter of credit, the advising or another bank
assumes the same responsibilities as the issuing bank, including
the obligation to pay against presented documents if they are in
order and all of the letter of credit terms are met. In effect, the
beneficiary has the individual promise of two banks to pay against
conforming documents; the issuing bank and the confirming bank.

How is a Letter of Credit Confirmed?

When negotiating the terms of sale, the seller would require a letter
of credit requesting the advising bank to add its confirmation. The
buyer includes this request when submitting the application for L/C
issuance to his bank. In most instances the issued credit states:
"Please advise beneficiary adding your confirmation" or words to
similar effect. Note: This is a request, not a requirement. The
advising bank for various reasons may decline to add its
confirmation and simply advise the L/C without engagement on
its part. When adding confirmation, typical language included in the
cover letter would be, "We hereby confirm this credit and thereby
undertake that all drafts drawn under, and in strict compliance with
the terms stated therein (and any further terms stated herein) will
be duly honored on presentation and delivery of documents as
specified, if presented, at this office on or before the expiry date."

Why Request Confirmation?

The beneficiary may have concerns about the political or economic
stability of the buyer's country, or the strength and reputation of the
issuing bank. Confirmation by a bank known and convenient to the
seller promotes the commercial utility of letters of credit. Also in the
event of a dispute, jurisdiction will be determined by the confirming
bank's location. THE PROBLEM / DISADVANTAGE IN LC CONFIRMATION IS
THE LC PAYMENT BECOMES RESTRICTED AND THERE WILL BE
UNNECESSARY CHARGES. SUCH AN LC IS MADE ONLY WHEN THERE IS
DOUBT ABOUT GETTING THE PAYMENT.
What is a standby letter of credit?

A Standby Letter of Credit (calledSLC or LC ) are written obligations
of an issuing bank to pay a sum of money to a beneficiary on behalf of
their customer in the event that the customer does not pay the
beneficiary. It is important to note that standby letters of credit apply
only whenever the issuing bank's commitment to pay is not contingent
on the existence, validity and enforceability of its customers obligation;
this is called an abstract guarantee; that is, the banks obligation is to
pay regardless of any disputes between its customer and the
beneficiary. The issuance of letters of credit is a private transaction
and does not result in the issuance of any public trading securities.

Why do we have standby letters of credit?

The standby letter of credit comes from the banking legislation of the
United States, which forbids US credit institutions from assuming
guarantee obligations of third parties. (Most other countries outside of
the USA continue to allow bank guaruntees.) To circumvent this US
banking rule, the US banks created the standby letter of credit, which is
based on the uniform customs and practice for documentary credits. In
1998 the International Chamber of Commerce (ICC) added ISP98
(International Standby Practices 98) as the rules to guide standby
letters of credit. These rules are slowly being adopted; however,
many of the standby letters of credit continue to rely on the ICCs older
guide, Uniform Customs and Practices for Documentary Credits, 1993
revision, ICC Publication 500.

Who are the parties to the standby letter of credit?

(1) The Applicant. This is the customer of the bank who applies to the
bank for the standby letter of credit. He must provide collateral to the
bank or have sufficient credit to induce the bank to issue the
instrument. He also must pay the bank a fee for issuing the instrument.

(2) The Issuing Bank. This is the applicants bank that issues the
standby letter of credit.

(3) The Beneficiary. This is the party in whose favor the instrument is
issued.

(4) Confirming Bank. This is a bank (usually located near the
beneficiary) that agrees (confirms) to pay the beneficiary rather than
have the issuing bank pay the beneficiary. The beneficiary pays the
Confirming Bank a fee for this convenience. The Confirming Bank then
collects from the Issuing Bank the amount paid to the beneficiary.

(5) Advising Bank. This is the bank that represents the beneficiary. It
may accept the letter of credit on behalf of the beneficiary and collect
on it on behalf of the beneficiary. In order for the transaction to be a
bank-to-bank transaction, the advising bank works for the beneficiary
to keep the instrument in the banking system. Sometimes the Advising
Bank also is the Confirming Bank, but not always.





What is the purpose of the standby letter of credit?

The standby basically fulfills the same purpose as a bank
guarantee: it is payable upon first demand and without objections
or defenses on the basis of the underlying transaction between
the applicant and the beneficiary. It is up to the beneficiary to
decide whether he may accept a standby.

GLOSSARY OF LETTER OF CREDIT:

Acceptance Draft - payable at a fixed or determinable future
date, upon the
face of which the drawee has acknowledged in writing his or her
obligation to
pay at maturity. See also "banker's acceptance" and "trade
acceptance".

Account Party - The party instructing the bank to open a letter of
credit and on
whose behalf the bank agrees to make payment. In most cases,
the account
party is the importer/buyer, and is also known as the applicant.

Advice of Fate - Notification of the status of a collection that is
still outstanding.
When a draft bears this phrase, the time begins to run from its
date. The date of
maturity is therefore fixed and does not depend on the date of
acceptance of the
draft.

Advising Bank - A bank that accepts a letter of credit from the
issuing bank,
verifies its authenticity, and forwards it to the beneficiary. The
advising bank
does not take on any payment obligations.

After Sight - When a draft bears this phrase, the time begins to
run from the
date of its acceptance.

Air Waybill (of lading) - A signed receipt and a contract to
deliver goods by
air. Such bills are non-negotiable and do not convey title to the
goods as do To
Order bills of lading used by ocean and land carriers. The title
passes to the

party to whom the goods are consigned (the Consignee).

Amendment - Change to terms of a letter of credit. Beneficiary
has the right to
refuse the amendment under an irrevocable letter of credit.

Applicant - See "account party".

Assignment of Proceeds - A request by the beneficiary to pay
all or part of the
funds due to him to a third party. This instrument does not
transfer rights in the
letter of credit nor the title to the goods.

Back-to-Back Letter of Credit (L/C) - Letter of credit issued for
the account
of a buyer who is already holding an L/C in his or her favor. The
back-to-back
L/C is issued in favor of the supplier to cover the same shipment
as stipulated in
the credit already held by the buyer. Terms of both L/Cs, except
for the amount
and expiration date, are so similar that the same documents
presented under the
back-to-back credit are subsequently applied against the credit in
favor of the
buyer. However, the buyer/beneficiary of the first credit
substitutes this draft
and invoice for those presented by the supplier. See also letter
of credit.

Bankers Acceptance - Form of credit created when a bank
accepts a time
draft typically drawn on the bank by a seller of goods. By
accepting a draft, the
bank is obligated to pay the face amount at a specified time in the
future, usually
six months or less after acceptance. A seller of merchandise can
sell the banker's
acceptance for an amount less than face value and have
immediate use of funds.
See also acceptance.

Bank Draft - A check drawn by a bank on another bank payable
to the seller at
the request of the buyer. The check may be denominated in U.S.
Dollars or most
foreign currencies.

Beneficiary - The party who receives payment as stipulated in a
letter of credit.
This party is usually the seller/exporter.

Bill of Exchange - Formal written order addressed by one
person (drawer) to
another (drawee), signed by the drawer, and directing the drawee
to pay on
demand or at a fixed or determinable future time, a certain sum in
money to the
order of a specified person (payee).

Bill of Lading (Air, Ocean, Railroad, Truck) - A document of
title issued by
the carrier (transport company) or its agent. Bill of lading is a
receipt for the
merchandise in transit, as well as a contract for delivery to a
specified party at a
specified destination.

BLANK ENDORSED - A negotiable bill of lading in which the
title to the
merchandise is passed on to another party by means of an
endorsement. The
holder of the blank endorsed bill of lading is entitled to take
possession of the
merchandise.

CLEAN BILL OF LADING - One in which the goods are
described as having
been received by the carrier in apparent good order and
condition and without
qualification. LATE PRESENTATION (STALE): A bill of lading is
presented to
a bank for payment or negotiation after the stipulated date in the
letter of credit,
or later than 21 days after the date of its issuance.

NEGOTIABLE OR TO ORDER - A bill of lading in which the
merchandise is
consigned directly to order or to the order of a designated
party, usually the
shipper or a bank. The phrase to order or to the order of (a
designated party)
signifies negotiability permitting the title of the merchandise to be
transferred
many times by means of appropriate endorsements.

NOTIFY - This phrase requires the carrier to notify a designed
party upon
arrival of the merchandise, but does not transfer title of the
merchandise to that
party.

STRAIGHT OR NON-NEGOTIABLE - A bill of lading in which
the
merchandise is consigned directly to a designated party,
generally the buyer, but
not to his order. Delivery of the merchandise is made only to the
designated
party, usually without surrendering the bill of lading.

THROUGH - A bill of lading issued by a shipping company or
their agent
covering more than one mode of transportation.

Cash Against Documents (CAD) - Payment for goods in which
an
intermediary (usually a bank) releases title documents to the
buyer upon payment
in cash.

Cash in Advance (CIA) - A term of trade in which the exporter
does not ship
goods until payment is received; offers the least risk to sellers
and the most risk
to buyers.

Clean Draft - A sight or time draft (bill of exchange) which is not
accompanied
by additional documents. Also referred to as "Clean Collection".

Collecting Bank - Bank that acts as an agent for a remitting
bank that wishes to
have its collections handled. The collecting bank demands
payment from the
buyer and handles the funds received as instructed; generally the
funds are sent
back to the remitting bank.

Commercial Invoice - A written and signed list of merchandise
and/or services
with associated quantities, prices and expenses. It contains the
terms of the sale
and is prepared by the seller to show the total amount owed by
the buyer.

Confirmed Credit - A letter of credit in which the issuing banks
obligation to
pay is backed (confirmed) by a second bank.

Deferred Letter of Credit (L/C) - Letter of credit that calls for
payment at a
future date, but does not require a draft. See also letter of credit
and usance
letter of credit.

Direct Collection - Method of payment for goods in which the
seller sends a
draft drawn on the buyer, the shipping documents, invoices,
insurance
certificates, other appropriate documents directly to the buyers
bank for
collection. Only an information copy of the advice is sent to the
exporters bank
to establish and monitor the collection transaction for the seller.

Discrepancy - Any deviation from the terms and conditions of a
letter of credit
or from the documents presented under the letter of credit.

Documentary Credit - A letter of credit issued to support the
movement of
merchandise supported by shipping documents presented by the
beneficiary to
the Issuing Bank for payment or acceptance.

Documents Against Acceptance (D/A) - Instructions given by a
shipper to his
or her acceptance bank that the documents attached to a time
draft for collection
are deliverable to the drawee/payer against his or her acceptance
of the draft.

Documents Against Payment (D/P) - Instructions given by a
shipper to his or
her bank that the documents are deliverable to the drawee/payer
only against his
or her payment of the draft.

Draft - A draft is a formal demand for payment. It is an
unconditional order in
writing, addressed by one party (drawer) to another party
(drawee), requiring
the drawee to pay, at a designated or determinable future date, a
specified sum in
lawful currency (either in dollars or other currency) to the order of
a named
party (the Payee). In international trade, drafts are also known as
Bills of
Exchange.

Eurodollars - A term used for U.S. dollars held on deposit or
traded anywhere
else in the world except in the USA.

Eximbank (Export-Import Bank of the United States) - A U.S.
government
agency that offers insurance/guarantees of commercial or
political risks
associated with U.S. export transactions. These programs
encourage U.S.
exports by reducing the exporters risk.

Expiry or Expiration Date - The date on which the draft and
documents drawn
under a letter of credit must be presented to the negotiating,
accepting, paying,
or issuing bank in order to effect payment. The issuing banks
obligation ceases
on that date if the letter of credit is a straight credit. If the letter
of credit is a
negotiable credit, the issuing bank must honor the credit,
provided the
complying documents were submitted prior to the expiry (or
expiration) date.

Foreign Exchange - The process of trading the currency of one
country for
that of another.

Foreign Exchange Exposure - A situation in which a U.S.
company,
selling/purchasing in a currency other than U.S. Dollars, runs the
risk of
receiving a reduced dollar amount or paying an increased dollar
amount due to a
fluctuating exchange rate.

Forward Transactions - Foreign exchange transactions settling
between three
business days and one year (and sometimes longer).

Freight Forwarder - An independent business that arranges for
the shipment of
export cargo and completes the necessary export documentation
on behalf of the
exporter.

Irrevocable Letter of Credit (L/C) - Letter of credit that cannot
be changed or
cancelled without the consent of all parties involved. Almost all
L/Cs are
irrevocable unless otherwise stated on L/C. See also letter of
credit.

Issuing Bank - Bank that draws up and issues the letter of credit
and that
makes payment according to the conditions

Letter of Credit - An instrument issued by a bank, at the request
of the
applicant, promising to pay the beneficiary upon his presentation
of stipulated
documents in accordance with the terms and conditions of the
credit.

CONFIRMED: A letter of credit issued by one bank to which
another bank
added its irrevocable confirmation to pay, thereby obligating itself
in the same
manner as the opening bank.

STAND-BY: A letter of credit that generally guarantees
payment due for an
unfulfilled obligation on the part of the applicant or another party.
It is payable
upon presentation of a draft, as well as a signed statement or
certification by the
beneficiary that the applicant has failed in his obligation.

Maturity Date - The date on which negotiable instruments
become due for
payment.

Negotiate - Take action to verify that the documents presented
under an L/C
conform to the requirements in order to release funds to the
seller.

Negotiating Bank - The bank that reviews the documents
required in the letter
of credit for compliance with its terms and remits payment to the
beneficiary.
The bank may be specifically named in the letter of credit, or may
be a bank
chosen by the seller.

Opening Bank - See "Issuing Bank".

Paying Bank - Bank that effects payment of documents
negotiated under a letter
of credit, customarily the buyer's bank. It is usually also the
negotiating bank,
unless the L/C allows another bank to negotiate or the paying
bank is unable to
negotiate. See also "negotiating bank".

Presentation - Presentation for acceptance or payment on a
collection or letter
of credit.

Proforma Invoice - An invoice sent in advance of shipment, to
enable the buyer
to obtain an import permit or exchange permit or both. The
proforma invoice
gives a close approximation of the weights and values of the
intended shipment.

Protest - Legal process of demanding payment of a negotiable
item from the
maker who has refused to pay.

Red Clause - Clause in a letter of credit that authorizes the
advising/negotiating
bank to make an advance payment to the beneficiary before
presentation of
shipping documents, usually against a simple receipt.

Reimbursing Bank - The bank names in a letter of credit as the
bank authorized
by the issuing bank to honor claims presented by the paying,
accepting, or
negotiating bank.

Revocable Letter of Credit (L/C) - A letter of credit that can be
modified or
canceled by the issuing bank without the beneficiarys consent
unless the
negotiation of complying documents has already taken place. The
issuing bank
must honor the draft(s) negotiated before the notice of revocation
has been made.

Spot Transaction - Foreign exchange transaction in which
foreign currency is
bought at the current rate of exchange and delivered within two
business days
after the transaction date.

Spread - The difference between the buying (bid) rate and the
selling (offer) rate
of any foreign currency for any particular period.

Standby Letter of Credit (L/C) - Letter of credit issued to back
an obligation
of the applicant, but typically not intended to be the primary
method of payment.
Usually payable against drafts and statements, but not against
commercial
documents. See also letter of credit.

Trade Acceptance - Draft drawn by the seller of goods on the
buyer and
accepted by the buyer for payment at a specified future date. See
also
acceptance.

Transferable Letter of Credit (L/C) - Letter of credit that permits
the
beneficiary to transfer all or some of the rights and obligations
under the credit to
a second beneficiary. See also letter of credit.

UCP - Uniform Customs and Practices for Documentary Credits.
Publication
issued by the International Chamber of Commerce (2007
revision, ICC
Publication No. 600, or UCP 600) that outlines the rules and
guidelines
involved in a letter of credit transaction.

Usance (Time) Credit - Letter of credit that calls for payment
against drafts
calling for payment at some specified date in the future. Gives
buyers time to sell
the goods to get the funds to reimburse the issuer.

Usance Letter of Credit (L/C) - Letter of credit that calls for
payment at a
future date -- generally within six months -- and requires a draft
drawn on the
issuing/paying bank for the amount of the invoice. See also letter
of credit.

Value (Settlement) Date - Contracted date on which the foreign
exchange is to be delivered or received.

Letters of credit can be divided into two major types.
They are:
Standby Letters of Credit - Which act as a
guarantee from a third party bank in the event of
non-payment on the part of the creditor.

and...

Documentary Letters of Credit - Which are typically
used by importers and exporters to transact
business between companies in foreign countries.

BUYING AND SELLING GOODS INTERNATIONALLY

International sales transactions between sellers and buyers
require an agreement as to the form of payment for the goods.
Various methods of payment settlement include but are not
limited to open account, foreign collection, cash in advance and
documentary credit. One of the most common forms of payment
is documentary credit, which is also known as a Letter of Credit.

What is a Letter of Credit?

A Letter of Credit is literally a "letter" pertaining to a sales
transaction between a buyer and seller. The "letter" is initiated
by the buyer and is directed to the seller or beneficiary, in most
cases. In some cases, the beneficiary may not necessarily be
the Seller but would be the party possessing the right to receive
payment for the goods or services. (Please refer to the
webpage dealing with transferable letters of credit for additional
information.)

A Letter of Credit is the traditional worldwide risk management
tool for international transactions. Issued by a foreign bank
(representing the buyer) and confirmed by a corresponding
bank usually in the country of the seller, a Letter of Credit is the
overseas bank's commitment to pay the seller's drafts. A Letter
of Credit is opened by an issuing or opening bank. The buyer
chooses the opening bank.

Revocable vs. Irrevocable Letters of Credit

A Letter of Credit may be revocable or irrevocable. In a
revocable Letter of Credit, the issuing bank (representing the
buyer) has the right to cancel or alter its obligation at any time
before payment of a sight draft or acceptance of a time draft.
That situation exists even if goods were shipped in reliance on
the expectation of payment.

An irrevocable Letter of Credit that is accepted by the seller,
however, cannot be altered or canceled without the consent of
the seller. Any change to an irrevocable Letter of Credit requires
the consent of all parties. Consent would include any parties
beyond the buyer and seller. For example the confirming banks
would be affected parties.

Confirmed vs. Unconfirmed

An irrevocable Letter of Credit can be either confirmed or
unconfirmed.

In a confirmed Letter of Credit, the issuing bank (representing
the buyer) agrees independently to the buyer's commitments to
pay the seller the agreed-up amount of money, as long as all the
requirements of the Letter of Credit are fulfilled.

A confirmed irrevocable Letter of Credit can become very
elaborate. A second bank (often specified as a prime bank) may
confirm or otherwise guarantee payment of the foreign bank that
initially opened the Letter of Credit. This requirement originates
from the seller and usually takes places only if the bank of the
buyer is not internationally established.

Other types of Letters of Credit

Other types of Letters of Credit may include straight or
negotiation credits. These types of Letters of Credit inform the
seller whether any bank, or only certain banks, can process the
documents of the seller to receive payment. All of the various
types of Letters of Credit can be combined in various ways with
extended rights and/or obligations, depending upon the exact
type of Letter of Credit issued. A Seller should be aware of
rights under a Letter of Credit before proceeding with a sale.

Letter of Credit rules- International Chamber of Commerse

A Standard Documentary Credit Application Form has been
developed by the International Chamber of Commerce (ICC), in
Paris, France. The ICC has also published a guide to
Documentary Credit Operations. Banks throughout the world
adhere to the rules developed by the ICC.

The rights and obligations of buyers, sellers and participating
banks in international Letters of Credit transactions are
presented in careful detail in publications made available by the
ICC. Under the Uniform Customs and Practices for Document
Credits (UCP), the International Chamber of Commerce has
made available in a publication called the UCP 600. The
publication is almost always referred to in international Letter of
Credit forms and is a part of the Letter of Credit contract. The
ICC also has available ICC Publication No. 511, which takes the
reader through UCP 600 on an article-by-article and
clause-by-clause basis. The ICC Publication No. 511 also
explains the reasoning that led the ICC Working Group to
develop a thoroughly revised sets of Rules for Documentary
Credits under UCP 600.

Benefits of using a Letter of Credit

By conducting export sales transactions under an irrevocable
Letters of Credit, the seller does not have to determine the
credit standing of the foreign buyer. Letters of Credit are issued
in many different forms from foreign banks and financial
institutions. The variations are due to differences in customs
and regulations of trade and finance in the country of origin of
the issuing bank or financial institution. If, for any reason, a
seller cannot comply with one or more conditions of a Letter of
Credit, it is absolutely imperative for the seller to contact the
buyer to arrange for one or more amendments to the original
agreement.

Letter of Credit Discrepancies

If there is a disagreement between a sale contract's shipping
and documentation requirements and those in a Letter of Credit,
the seller must take immediate action before shipping to arrange
for an amendment to the Letter of Credit. If the seller does not
arrange for such an amendment, the seller may experience
payment problems. Full compliance with all conditions for
payment are interpreted by banks rigidly. Any disagreement,
however small, represents grounds to reject the payment of the
draft.

On a worldwide basis, approximately 60% of document
presentations on Letters of Credit are presented with
discrepancies. Banks charge for EACH discrepancy. Therefore,
it is extremely important to ensure document presentations are
accurate and complete to avoid additional costs and delays in
payment processing.

Payment on a Letter of Credit

The documents listed in a Letter of Credit are presented to the
negotiating/paying Bank with a draft, which is sometimes
referred to as a "bill of exchange". A draft resembles a check. In
a Letter of Credit sale, the drawee on the draft is the bank that
issued the Letter of Credit. The seller is the drawer of the draft.

Drafts are classified as either sight or time. A sight draft requires
a drawee to pay the amount shown in full upon proper
presentation of documentation. On a time draft, a payment date
later than the date of presentation would be stipulated (such as
60 days after sight or 90 days after sight).

When properly presented, a time draft is accepted by the
drawee. This means the drawee indicates an acknowledgement
that the necessary conditions to its payment were met and the
drawee is obligated to pay on the appointed date.

Paying a sight draft or accepting a time draft when documents or
goods have been presented is known as honoring the draft.

If the Letter of Credit states "payment at sight", the seller should
receive payment within a reasonable time (usually not exceeding
seven days) after documents are presented within the validity
period of the Letter of Credit and accepted by the negotiating
(paying) bank.

Usual Letter of Credit conditions

The usual conditions included in a Letter of Credit include
delivery dates, product specifications and receipt by the bank of
specific documents (such as negotiable bills of lading, inspection
certificates, commercial invoices and packing lists). Any required
documents must be presented to the bank within a specific
period of time. There may also be other terms and conditions as
negotiated between the buyer and seller.

Letter of Credit terms and conditions (and all required
documents) should be agreed upon between the buyer and
seller, in advance of opening of a Letter of Credit. Letter of
Credit issuance instructions should then conform to the terms of
such an agreement.

Exporters in the United States should request the overseas
buyer to open an Irrevocable Commercial Letter of Credit,
payable 100% at sight, freely negotiable or confirmed by a bank.
If the Letter of Credit is to be confirmed, the seller should also
request the buyer to instruct the issuing bank to obtain the
Letter of Credit confirmed by a bank in the United States.