Document background
The Confirmed LC is a crucial financial instrument in international trade transactions where additional payment security is required, particularly when dealing with unfamiliar jurisdictions or higher-risk markets. This document type adds a second bank's guarantee to the original Letter of Credit, providing the beneficiary with two independent commitments to pay. Under US jurisdiction, it is governed by the Uniform Commercial Code Article 5 and federal banking regulations, while also adhering to international banking practices under UCP 600. The Confirmed LC typically includes detailed specifications about the transaction, required documents, payment terms, and both banks' obligations. It is particularly useful when the beneficiary has concerns about the credit standing of the issuing bank or the economic/political stability of the issuing bank's country.
