A RE-EXAMINATION OF THE PLACE OF LETTERS OF CREDIT IN MODERN DAY GLOBAL COMMERCIAL TRANSACTIONS

Abstract

One factor that must exist in a contract of sale of goods is payment of money consideration called price. Although the most commonly used mode of payment is by cash or cheque, there has sprung up in present times another mode of payment which is by the instrument called 'Documentary Letters of Credit'. This paper sets out to examine the concept of documentary letters of credit. It scrutinizes the various types of letters of credit. In examining the concept of documentary letters of credit, the paper looks at the 'doctrine of strict compliance', how a letter of credit is opened, its application in Nigeria, its advantages and salient points on letters of credit. The paper also considers the instruments of letters of credit and the contract of sale of goods particularly its use in the Nigerian sphere/banks vis-à-vis modern day global commercial transactions.