why L/C is more reliable and safer than D/P and D/A for both importers and exporters

题目

why L/C is more reliable and safer than D/P and D/A for both importers and exporters

答案

It is because L/C is a bank credit while D/P and D/A are both commercial credits.
D/P is a credit called delivery against payment,that is to say,only after the buying party of a contract has paid the advance payment can the selling party deliver the goods.If the selling party failed to keep the agreement after having received the advance payment,there would be no any guarantee from a third party and the buying party would take a risk himself.
D/A is a document against acceptance and it is just by contrast to D/P,namely,the buying party does not pay for retiring document to pick up the goods until the selling party has delivered it.In the case of D/A,the selling party takes the risk without any guarantee from a third party.
But in the case of L/C which is issued by a bank,both the buying and selling parties will avoid any risks because there are two banks respectively taking on each parties’ warrantors as a third party and take the risks in the course of dealing.