In every contract for international sale of goods, the trading parties need to agree a method of payment. The way of payment in fact represents the reconciliation between the conflicting interests involved in international trade transactions. The seller’s interest is to obtain the payment as soon as possible, ideally before parting with the goods or at least the documents which can control the goods. The buyer, on the other hand, wishes to postpone the payment as late as possible, even until realisation of money by reselling the goods. To achieve a reconciliation of these conflicting interests, the interposition of banks as an intermediary is often necessary. This course covers the law on various financial instruments commonly used in international trade transactions, in particular letters of credit, which have been described as the life-blood of international commerce.