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Letters of Credit
Commissions and Charges for Letters of Credit
Commissions are charged for services rendered in order to offset credit and settlement risks, and to cover the cost of providing collateral.
Unless stipulated otherwise in the letter of credit, these commissions are charged to the seller. If the letter of credit stipulates that the charges are to be borne by a party other than the buyer and if these charges cannot be collected, the buyer is ultimately held liable for their payment (Article 37 of UCP – Uniform Customs and Practice for Documentary Credits).
Exception: Under a negotiable credit the negotiation commission (interest) is charged to the seller unless the letter of credit explicitly states otherwise.
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