An American merchant who buys goods from a French merchant obtains a letter of credit from an American bank. A French bank, upon the request of the American bank, notifies the French seller that the letter of credit has been issued. In this case, the American buyer is the issuer, the American bank is the correspondent bank, and the French bank is the advising bank.

Question

Quizplus · Accepted Answer

The American buyer is not the issuer, but the applicant of the letter of credit. The issuing bank is the American bank. The American bank is the issuing bank, the French bank is the advising bank, and the French seller is the beneficiary.

An American Merchant Who Buys Goods from a French Merchant