Economics · International Trade Finance
What is a core operational feature of a Documentary Credit (Letter of Credit) transaction regarding compliance?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The buyer must physically inspect the quality of the cargo before the issuing bank releases the funds.
- 2Payment is automatically executed by the bank without verifying any presented documents.
- 3Banks deal solely with documents and not with the goods, services, or performance to which the documents relate.✓
- 4Payment is made based purely on the physical condition of the goods delivered.
Correct answer
Banks deal solely with documents and not with the goods, services, or performance to which the documents relate.
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