Document background
The Letter of Credit Contract is a fundamental instrument in international trade finance, particularly relevant under Swiss law given Switzerland's prominence as a global financial and trading hub. This document is essential when parties seek a secure payment mechanism in cross-border transactions, providing assurance to sellers of receiving payment and to buyers of receiving goods as specified. The contract type is specifically designed to mitigate risks in international trade by having a bank act as an intermediary, guaranteeing payment upon presentation of compliant documents. A Letter of Credit Contract typically includes detailed terms about the credit facility, document requirements, payment conditions, and bank obligations, all structured within the framework of Swiss banking laws and international practices such as UCP 600. It's particularly valuable in situations where parties may not have established trading relationships or when dealing with high-value transactions requiring additional security.
