Document background
Commercial Letters of Credit are fundamental instruments in international trade finance, particularly crucial in Hong Kong's position as a global financial hub. These documents are typically used when businesses engage in international trade transactions where the parties seek additional security and risk mitigation. A Commercial Letter of Credit provides assurance to sellers that they will receive payment and to buyers that goods will be delivered according to specified terms. The document includes detailed information about payment terms, shipping requirements, required documentation, and compliance conditions. Under Hong Kong jurisdiction, these instruments are governed by local banking regulations and international standards such as the UCP 600, making them highly standardized and internationally recognized. They are particularly valuable in situations where parties have limited trading history or operate in different jurisdictions, offering a secure method of conducting international trade.
