Under a documentary credit, banks examine documents rather than the physical goods. “At sight” generally means payment is due after a complying presentation and completion of the bank's examination process—not necessarily immediately after loading or arrival.
Core structuring points
- Applicant, beneficiary, issuing bank, advising or confirming bank.
- Applicable rules, commonly UCP 600 where expressly incorporated.
- Amount, tolerance, expiry, presentation place and latest shipment date.
- Permitted shipment, trans-shipment and partial-shipment terms.
- Exact document list and wording.
- Availability by sight payment, negotiation or another stated method.
Avoid impossible or subjective conditions
Document conditions should be objective, obtainable and aligned with the sale contract. Requirements such as an invoice, packing list, transport document, origin certificate, weight certificate and inspection certificate must use consistent party names, quantities, ports and dates. A condition that cannot be evidenced by a stipulated document may not protect the applicant as expected.
Residual risks
An LC does not eliminate forged documents, sanctions issues, bank risk, documentary discrepancies, quality disputes outside the required certificate, or seller and buyer fraud. Independent counterparty checks, inspection access, vessel and document verification, and controlled bank communications remain necessary.
General commercial guidance only. Grade nomenclature and market practice vary. The signed contract, current official specifications and transaction-specific professional advice control.