Independent Payment Undertaking

An Undertaking issued by a buyer pursuant to a contract for sale to make payment to the person to whom the undertaking is addressed against presentation of the documents specified therein. Prevalent in the oil trade and addressed typically to the financing bank of a seller under a contract for sale to finance the seller's own purchase of oil under a back to back contract for sale. As the Undertaking is addressed to the financing bank, the financing bank has recourse to the buyer which issued the Undertaking.

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