Letter of Credit
/ˈlɛtər əv ˈkrɛdɪt/
Definitions
- (n.) A written commitment by a bank on behalf of a buyer guaranteeing payment to a seller upon presentation of specified documents evidencing shipment or fulfillment of contract terms.
The exporter relied on the letter of credit to ensure payment upon dispatch of the goods.
Forms
- letters of credit
See also
Commentary
In drafting or interpreting letters of credit, precision in documentary requirements is crucial to avoid non-payment due to discrepancies.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.