Understanding Letters of Credit: Rules, Responsibilities & Liabilities

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Recorded Webinar Includes

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Letters of credit have been around for many years, but they remain a mystery to many financial institutions. Commercial letters of credit are commonly used to facilitate a purchase and sale transaction and generally are intended to be drawn on, while standby letters of credit are commonly used as back-up security that is rarely intended to be drawn on.

More recently, letters of credit are being used as a substitute for surety bonds, workers’ compensation insurance, construction contract bonding, governmental licenses, purchase price holdbacks, and environmental cleanup obligations. There is substantial liability and risk to financial institutions which issue letters of credit. This webinar will address the general rules under UCC Article 5 regarding all letters of credit, the Uniform Customs and Practice for Documentary Credits UCP 600 governing commercial letters of credit, and the International Standby Practices ISP 98 governing standby letters of credit.

Recorded Wednesday, July 27, 2016

Attendance certificate provided to self-report CE credits.


  • Overview of the parties involved in a letter-of-credit transaction
  • Responsibilities and liabilities of each entity associated with letters of credit
  • Comparison of commercial letters of credit versus standby letters of credit
  • Comparison of documentary letters of credit versus non-documentary letters of credit
  • Reimbursement agreements as replacements for “dummy” notes
  • Review of the rules under UCP 600, the ISP 98, and UCC Article 5
  • Recommended policies and procedures for issuing and accepting letters of credit

    • Sample letter-of-credit policy
    • Employee training log
    • Quiz you can administer to measure staff learning and a separate answer key


This informative session is designed to assist in understanding letters of credit and proper handling of letters-of-credit transactions.  It is directed to staff involved in issuing, underwriting, processing, or accepting letters of credit.

NOTE:  All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your financial institution is prohibited. Print materials may be copied for eligible participants only.


Spencer Fane LLP
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