Multiple choice

Which of the following is incorrect in the context of letter of credit?

  1. The party on whose request LC is issued is called beneficiary.

  2. The bank that makes the payment to the beneficiary against documents and claims payment from issuing bank is called negotiating bank.

  3. Bank that has the final liability on LC, if documents are received in order, is called the issuing bank.

  4. The bank with which credit is available is called the nominated bank.
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A Correct answer
Explanation

Beneficiary is the party who is to receive the benefit (payment) of the LC. The consignee of an LC and the beneficiary may not be the same. The credit is issued in the beneficiary's favour.

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