Based on my extensive experience in trade finance at major Ghanaian banks, I address this with references to UCP 600 and practical applications under BoG regulations.

(a) Definition of Documentary Credit under UCP 600:

• Under Article 2 of UCP 600, a documentary credit (or letter of credit) is defined as any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honor a complying presentation. This means the bank commits to pay the beneficiary upon presentation of documents that comply with the credit terms, independent of the underlying contract.
• In practice, this autonomy principle protects parties in international trade; e.g., at Ecobank Ghana, it’s used in import/export deals to ensure payment security amid exchange controls. The irrevocability (unless all agree otherwise) aligns with Act 930, emphasizing compliance to avoid discrepancies.

(b) Contractual Relations Between Parties to Documentary Credits:

• Applicant (Buyer) and Issuing Bank: Contractual via the application form; applicant reimburses the bank and provides indemnity for discrepancies.
• Issuing Bank and Beneficiary (Seller): Independent undertaking; bank pays on complying documents, no direct relation to applicant-beneficiary contract.
• Issuing Bank and Advising/Confirming Bank: Agency-like; advising bank notifies, confirming adds its undertaking for added security in risky jurisdictions.
• Beneficiary and Advising/Confirming Bank: Beneficiary relies on confirmation for payment assurance.
• Overall, relations are autonomous contracts, as per UCP 600’s fraud exception. In Ghana, post-2019 cleanup, this structure mitigated risks in cross-border trades, with BoG oversight ensuring anti-fraud compliance.