Document background
The Irrevocable At Sight Letter of Credit is a fundamental instrument in international trade finance, used when parties seek secure payment methods in cross-border transactions. This document is particularly relevant when sellers require payment security and buyers need to demonstrate their creditworthiness through bank backing. Under US jurisdiction and governed by both federal banking regulations and the UCC Article 5, it provides a legally binding commitment from a bank to pay the beneficiary upon presentation of specified documents. The irrevocable nature means it cannot be modified or canceled without agreement from all parties, while the 'at sight' feature ensures immediate payment upon document verification. This instrument is commonly used in import/export transactions, commodity trading, and large international purchases where parties may not have established trading relationships or want to mitigate country and commercial risks.
