letter of credit
noun [ C ]
ukusplural letters of credit ( abbreviation L/C) FINANCE, COMMERCE
a financial document in which a bank formally promises to pay a particular amount of money into the bank of a person selling goods if the goods are delivered by an agreed date and in an acceptable condition. Buyers often use letters of credit to buy goods from other countries:
The bank issued the letter of credit on the instructions of the importer.
For export sales, the price of the goods are secured by a letter of credit.
FINANCE
in a situation in which bonds, etc. are sold, a written promise by a bank to pay the lender if the borrower is unable to do so:
The notes are secured by bank letters of credit.
See also
confirmed letter of credit
documentary letter of credit
irrevocable letter of credit
standby letter of credit