p. 73529. Financing international trade
- Reza Beheshti, Reza BeheshtiAssistant Professor in International Commercial Law, University of Nottingham
- Séverine SaintierSéverine SaintierProfessor of Commercial Law, Cardiff University
- , and Sean ThomasSean ThomasReader, University of York
Abstract
This chapter covers the financing of international trade. It details the nature, essential characteristics, and stages of documentary credit transaction, wherein the buyer is required to enter into an arrangement with a bank whereby the bank gives the seller an undertaking to pay the price due under a contract. Essentially, the documentary credit is ideal as a payment guarantee, particularly in contracts of sale. However, other breaches may take place, such as failing to deliver or extensive losses to the buyer. The chapter then offers different performance guarantee arrangements which share features of the documentary credit while securing the performance of obligations other than financial payment.
