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The parties to a Letter of Credit are (1) the Buyer (the applicant) (2) the Buyer's bank (the issuing) (3) the Beneficiary (the seller/payee) (4) the beneficiary's bank (the ADVISING BANK). (5) the CONFIRMING BANK (often the same as the advising bank) The LC outlines the conditions under which payment (credit) will be made to a third party (the Beneficiary). The conditions are specified by the buyer and may include insurance forms, Way Bills, Bills of Lading, Customs forms, various certificates - i.e. whatever documents the Buyer feels are necessary to safeguard the integrity of the purchased product or service upon delivery. It is the responsibility of the issuing bank to ensure, on behalf of its client (the Buyer), that all documentary conditions have been met before the Letter of Credit funds are released. In effect, a basic Letter of Credit is a financial contract between the bank, the bank's customer, and the beneficiary, and this contract* involves the transfer of goods or services against funds.

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Q: How many parties involved in letter of credit?
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