Definition of “letter of credit” - English Dictionary

(Definition of “letter of credit” from the Cambridge Advanced Learner's Dictionary & Thesaurus © Cambridge University Press)

“letter of credit” in Business English

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letter of creditnoun [ C ]

uk us plural 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:

(Definition of “letter of credit” from the Cambridge Business English Dictionary © Cambridge University Press)

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