The Learning of LC  

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The Learning of LC  (Easy + Detailed)
Think:
You are importing toys from China.
You and the seller don't know each other — so you're both afraid.
To reduce this fear, the bank was placed in the middle.
The bank said, "You send the goods, I'll pay." And if you get the product right, pay the bank. LC
 's main character
character Kaz

buyer (Applicant) wants to buy goods — goes to the bank to open
 LC seller (beneficiary)sells goods —  gets
money through the bankissuing bank buyer, LC is issued
 by Advising BankSeller's country bank, LC- News of
Confirming Bank ---- Seller's additional security (doesn't always take)

Step-by-step
1️action of LC Buyer goes to bank → to open
2️LC Issuing Bank sends
3️  LC to Seller's  Advising Bank → Seller sends goods →By
  ship/plane Seller sends paper to → bank (Invoice, Packing List, Bill of lading, etc.) Bank  
pays → Seller when all goes well
Buyer pays the bank → redeems the product Documents required in LC Commercial Invoice → Product Price6️

 
& Details4️
Packing List →  What goods, how many packs
Bill of Lading Proof of → transport
Certificate of Origin → from which country
 is insured→ an insurance certificate
Inspection Certificate → Quality Check (if required)Why

LC is safe
Buyer: No need to pay if the product does not arrive
Seller: Money if all the papers are in order Pub
Bank: No one cheats on working with a guarantee in the middle

LC Type of
 LC Sight LC →  Pay by Paper
Usance LC → Pay after a few days (e.g.  after 60 days)
Irrevocable LC →  cannot be changed/cancelled once opened  (most commonly used
Revocable LC → can be canceled at any time (not used nowadays)
Back-to-Back LC →  LC against another LC

Small memorization trick:
"LC stands for safety bridge between shipping and payment"

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