Responsibilities and Liabilities of Applicant/Importer

The responsibilities and obligations of the Applicant(Importer):

i) Since the credit is based on the sale contract with the exporter i.e. the importer has a duty to the exporter to ensure that the credit is opened as per the terms of the sale contract. However, once a credit is issued, it stands by itself whether or not it is in accordance with the sale contract.

ii) Even if the bank that opens a letter of credit fails the importer remains liable to the exporter for the amount if the exporter has fulfilled his obligation under the contract.

iii) The obligations between the importer and the issuing bank are governed by the application-cum-agreement submitted by the importer to the bank.

iv) The applicant is liable to indemnify the banks against all obligations and responsibilities impossed by foreign laws and usages.

Parties involved in Letter of Credit