Naeem Ullah Khan, Muhammad Nadeem Farid
Letters of Credit are the instrumental force to minimize the risk of exporter and importer in international trade, and act as a catalyst for the smooth functioning of international business transactions. This document is called the life blood of the international trade. In international business transactions, the distance between the buyer the seller, as well as the different dynamics of the foreign market, increases the risk of seller with regard to payment, on the other hand the risk of the buyer with regard to the shipment of the goods. Therefore, the Letter of Credit acts as an instrumental force to minimize the risk of both parties. Hence, the Documentary Letter of Credit is an arrangement through Bank between the seller and buyer, and acts as a substitute for cash. It allows the seller to be paid as soon as the goods are shipped, and also gives the guarantee to the buyer that the goods are en-route and will conform to the contract. In this connection, UCP 600 explores the idea of doctrine of autonomy of letter of credit and strict compliance. However, the Courts have played a pivotal role in the interpretation of these doctrines. The present research is based on qualitative approach, and it will explore the implications of LC in international business transactions.