In a global trade transaction, Dicky 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 Dicky entitle to receive payment despite the loss of the cargo?

Question

In a global trade transaction, Dicky 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 Dicky entitle to receive payment despite the loss of the cargo?

Quizplus · Accepted Answer

Under a documentary letter of credit, payment is made based on the presentation of the required documents, not the actual delivery of goods. If Dicky submitted all necessary documents correctly, he is entitled to payment despite the loss of the cargo.

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