Letter of credit

(LC).

A promise document issued by a bank or another issuer to a third party to make a payment on behalf of a customer in accordance with specified conditions.

Letters of credit are frequently used in international trade to make funds available in a foreign location.

See also

• Advising bank
• Bank payment obligation
• Clean letter of credit
• Commercial risk
• Condition
• Confirmed letter of credit
• Confirming bank
• Credit
• Documentary credit
• Irrevocable letter of credit
• Issuing bank
• LOC backed
• Standby letter of credit
• Trade finance
• Uniform Customs and Practice for Documentary Credits

Other links

Letters of credit and supply chain finance, Will Spinney, ACT 2009