online dictionaries of abbreviations

C E F I L N O P R T V W
LC

LC

Letter of Credit
A document issued by a financial institution which essentially acts as an irrevocable guarantee of payment to a beneficiary. This means that if the applicant obtaining the LC fails to perform its obligations, the bank must pay. The LC can also be the source of payment for a transaction, meaning that an exporter will get paid by redeeming the letter of credit. LCs are used nowadays almost exclusively in international trade transactions of significant value, for deals between a supplier in one country and a wholesale customer in another. The parties to a letter of credit are usually an applicant who wants to send money, a beneficiary who is to receive the money, the issuing bank of whom the applicant is a client, and the advising bank of whom the beneficiary is a client. In executing a transaction, letters of credit incorporate functions common to giros and travellers cheques.

Need more information on LC?
to main page Top 10FeedbackAbout top of page
© 2008 Admin User XHTML | CSS Powered by Glossword 1.8.12