Ender Case

Moreover, since the seller and the buyer are in different countries, in contrast

with domestic sales, simultaneous exchange of goods and money is not possible in

international trade. So the delivery of the goods with one hand and collection of the

money with the other is not an eventuality of international trade. For this reason, both

parties have interest in expecting the performance of the other party initially. The seller

would like to be paid in advance or at the latest as soon as he parts with the goods. In

contrast the buyer would wish to delay payment as much as possible, at least until

arrival of the goods, since payment on arrival will enable him to ascertain whether the

goods are of right quality.2

The evaluation of risks in international trade and the interests of the parties

play a major role in determining the method of payment to be used for settlement

between the buyer and the seller. The degree of risk from the point of the seller or the

buyer is dependent on the mode of payment. In this respect, documentary credits differ

from the other payment methods since it serves to both the importer's and the exporter's

interests and provides the necessary security for the parties. For this reason, it has a

widespread use for the finance of international sales. These superior features of

documentary credits will be stated in detail in the following sections.

It is to be expressed here that the documentary credit concept was not

contemplated and designed by lawyers. Nor is it regulated in most of the national laws.

The defect of a national code governing the operation of documentary credits was

overcome by "Uniform Customs and Practices" (hereafter UCP) promulgated by

International Chamber of Commerce (hereafter ICC). Those rules have got a

widespread acceptance almost all over the world and today, most of the documentary

credits run according to those rules. Very recently, during the study of this thesis last