<P> In the event that the buyer is unable to make payment on the purchase , the seller may make a demand for payment on the bank . The bank will examine the beneficiary 's demand and if it complies with the terms of the letter of credit , will honor the demand . Most letters of credit are governed by rules promulgated by the International Chamber of Commerce known as Uniform Customs and Practice for Documentary Credits . The current version , UCP 600 , became effective July 1 , 2007 . Banks will typically require collateral from the purchaser for issuing a letter of credit and will charge a fee which is often a percentage of the amount covered by the letter of credit . </P>
<P> In the event that the buyer is unable to make payment on the purchase , the seller may make a demand for payment on the bank . The bank will examine the beneficiary 's demand and if it complies with the terms of the letter of credit , will honor the demand . Most letters of credit are governed by rules promulgated by the International Chamber of Commerce known as Uniform Customs and Practice for Documentary Credits . The current version , UCP 600 , became effective July 1 , 2007 . Banks will typically require collateral from the purchaser for issuing a letter of credit and will charge a fee which is often a percentage of the amount covered by the letter of credit . </P>
who bears the payment risk in a letter of credit
who bears the payment risk in a letter of credit
the bank
the bank