letters of credit

letters of credit
A letter of credit is an undertaking, which is irrevocable, by the customer's bank to pay a stated sum of money to the exporter, provided certain specified conditions are met including the receipt of the necessary documentation proving performance of the transaction.

Easyform Glossary of Law Terms. — UK law terms.

letters of credit
Also known as documentary credits. The most frequent form of payment in international trade. A traditional letter of credit is a contract under which a bank agrees to pay the seller, in connection with the export of specific goods, against the presentation of specified documents relating to those goods. The letter of credit is issued at the request of the buyer (who is then referred to as the applicant for the credit) in favour of the seller (the beneficiary of the credit).
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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