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MERICAN Journal of Public Diplomacy and International Studies
www.
 grnjournal.us 
 
convenience for the seller (contractor, contractor) who has agreed with the counterparty to make 
a payment under a letter of credit. The letter of credit form of settlements is relatively common 
in international practice, since in this case the letter of credit performs its main function, along 
with the settlement, as well as the function of collateral. Its convenience lies in the fact that the 
recipient of funds will be able to receive payments under the letter of credit by providing the 
bank with a set of documents confirming the full fulfillment of its obligations to the payer of 
funds. 
At the moment, all the norms of settlements under a letter of credit represent the turnover of 
certain documents in international practice, and this situation requires, first of all, Simplified 
Rules of documentary letters of credit (hereinafter - Simplified Rules). 
The CC (articles 796-803) and the Law "On Payments and Payment Systems" are regulatory 
documents regulating relations arising in connection with the use of accounts in the form of 
letters of credit on the territory of the Republic of Uzbekistan. 
When calculating a letter of credit, the bank (issuing bank) that opened the letter of credit, at the 
request of the client (payer) and in accordance with his instructions, undertakes to make a 
payment if the recipient of funds or a person appointed by him submits documents and fulfills 
other conditions stipulated by the letter of credit (part 1 of article 796 of the CC). 
This definition makes it possible to distinguish the following features of a letter of credit: 

letter of credit - a monetary obligation, the fulfillment of which is usually carried out on the 
basis of the conditions for the provision of documents specified in the letter of credit; 

is a letter of credit agreement based on a settlement agreement in the form of a letter of 
credit, and the bank does not participate in the execution of this agreement. Such justification 
is expressed, in particular, in the fact that the issuing bank is not obliged to verify the 
compliance of the terms of the letter of credit with the agreement between the payer of funds 
and the recipient of funds (beneficiary). Even the inauthenticity of the contract under which 
the letter of credit was opened for payment does not lead to the validity of the letter of credit; 

payment by letter of credit is made by the bank on its own behalf, but on behalf of the client; 

payment by letter of credit is made by the bank at the expense of its own funds or the client's 
funds; 

the opening of a letter of credit and settlements under it create a single purpose of 
transactions between different participants in credit and settlement relations [4]. 
Article 796 of the CC defines the subject, content and subjects of obligations arising from 
settlements under a letter of credit. 
In a broad sense, the payer of funds, the issuing bank, the recipient of funds and, as a rule, the 
executive bank participate as subjects of credit obligations. 
The basis for the occurrence of letter of credit obligations is the order of the payer of funds to 
open a letter of credit to the bank serving it. Since the bank is connected with the payer through a 
bank account agreement, if the form and content of the documents comply with the requirements 
of the legislation, the bank has no right to refuse to perform this task. 
The form of the client's order to the bank is issued in the form of an application for a letter of 
credit. The application must contain all the information about the calculation. The letter of credit 
application may specify the conditions for loading the goods at certain points, a ban on partial 
payments, compliance with a certain method of shipment. The content of the order consists in the 
issuing bank performing one or more actions for a third party in accordance with the instructions 
of the payer of funds or in authorizing another bank (executive bank) to do so. The scope of such 
actions is defined in article 796 of the CC as "making payments to the recipient of funds". 

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