Golfing Inc
Subject:EconomicsPrice:2.87 Bought7
Golfing Inc. assembles golf carts that are used on golf course as well as other touristic locations such as resorts and beaches. In recent years, Golfing Inc. has received multiple inquiries from companies based in Cuba for the purchase of their product. In consideration of the contract, Golfing Inc. has requested payments to be made via letter of credit. Furthermore, given the size of the contract, Golfing Inc.’s supplier is seeking a guarantee of future payment. Which of the following will be an ideal type of letter of credit Golfing Inc. should ask for?
A Red clause letter of credit
B Transferable letter of credit
C Confirmed letter of credit
D Revolving letter of credit
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Answer: Option C
Explanation: Confirmed letter of credit will be an ideal type of credit Golfing Inc. should ask for. This is because confirmed letter of credit provides guarantee or assurance from a first letter of credit as well as a second bank. The payment of the seller i.e Golfing Inc. would be more safe with confirmed letter of credit. Therefore, option C is the correct answer. Option A is incorrect because red clause letter of credit is an advanced loan or payment given to the seller. Option B is incorrect because transferable letter of credit requires a third party beneficiary. Option D is incorrect because revolving letter of credit is used for more number of transactions between same seller and purchaser, which is not happening in this case.
