How does an advised letter of credit differ from a confirmed letter of credit?
The principal difference between an advised letter of credit and a confirmed letter of credit is the absence of a U.S. confirming (guaranteeing) bank in an advised letter of credit. The risk for payment under an unconfirmed letter of credit, therefore, is the foreign issuing bank, not a U.S. confirming bank. The involvement of a U.S. bank in an unconfirmed letter of credit will be limited to “advising” the unconfirmed letter of credit’s details to the seller and possibly to paying the seller under the unconfirmed letter of credit with recourse, i.e. with the ability to retrieve from the seller any funds paid to the seller, in the event that the U.S. bank does not receive reimbursement from the foreign issuing bank.
• The principal difference between an advised letter of credit and a confirmed letter of credit is the absence of a U.S. confirming (guaranteeing) bank in an advised letter of credit. The risk for payment under an unconfirmed letter of credit, therefore, is the foreign issuing bank, not a U.S. confirming Bank. The involvement of a U.S. bank in an unconfirmed letter of credit will be limited to “advising” the unconfirmed letter of credit’s details to the seller and possibly to paying the seller under the unconfirmed letter of credit with recourse, i.e. with the ability to retrieve from the seller any funds paid to the seller, in the event that the U.S. bank does not receive reimbursement from the foreign issuing bank.
