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Question

What Is the Difference Between Bill of Exchange and Letter of Credit?


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Solution

The difference between a letter of credit and bill of exchange is that while a letter of credit is a payment mechanism, the bill of exchange is a payment instrument.

Also, the number of parties in a letter of credit is four which are buyer, seller, issuing bank and advising bank. In case of a bill of exchange, the number of parties are three which are drawer, drawee and payee.

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