In a global trade transaction,Ricky ships goods under a clean bill of lading and submits all the necessary documents under a documentary letter of credit to the buyer Joe to his bank.While on traveling to Turkey in the Mediterranean Sea,the ship sinks.Is Ricky entitle to receive payment despite the loss of the cargo?

Question

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Ricky is entitled to receive payment as long as all necessary documents, including a clean bill of lading, are in order and have been submitted under the terms of the documentary letter of credit. The documentary letter of credit is a financial instrument that guarantees payment to the seller upon submission of the required documents, regardless of the condition of the goods upon arrival.

In a Global Trade Transaction,Ricky Ships Goods Under a Clean