A DOCUMENTARY credit is frequently the agreed method of
settlement for international trade. The buyer's bank reimburses the
seller against presentation of documents drawn in compliance with
conditions stipulated in the documentary credit by the buyer.
There are advantages to both the buyer and seller when
settlement is arranged by documentary letter of credit. First, the
buyer knows that payment will only be made if the documents
received comply strictly with the terms and conditions of the
credit as stipulated by the buyer. Second, the seller knows that
payment will be received provided the terms and conditions of the
credit are strictly complied with.