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The bill of lading’s functions, as we know them today, developed in the nineteenth century, at around the same time as the c.i.f. contract. The documentary credit is a creature of the early twentieth century, somewhat later but nonetheless from an era when trading conditions were different from today. The bill of lading and bankers’ documentary credit are ideally suited to sales where the buyer’s standing is uncertain, and where a paramount concern of all the parties, including the banks, is security against bankruptcy of one of the other parties. Such markets continue to exist today, where there is no satisfactory alternative to the traditional bill of lading and bankers’ documentary credit. Quite apart from the security provided by the documentation, which has been significantly increased, in the UK at least, by the Carriage of Goods by Sea Act 1992, the system is very flexible. Bills of lading can be issued by carriers to traders anywhere in the world, with no need for complex infrastructures, and documentary credits can be issued by any concern with sufficient financial standing to be relied upon.
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