L C Meaning and
Definition
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L C is a commonly used abbreviation that stands for Letter of Credit. It refers to a document issued by a financial institution, usually a bank, on behalf of a buyer (importer) to guarantee payment to a seller (exporter) for a specified sum of money. The L C serves as a commitment by the issuing bank to honor the payment obligations of the buyer, assuring the seller that they will receive their payment upon fulfilling the terms and conditions of the agreement.
The Letter of Credit is a crucial tool used in international trade transactions to mitigate risks and establish trust between buyers and sellers from different countries. It provides a secure method of payment, as the seller knows that the issuing bank will release the funds upon receipt of the required documents that validate the completion of the agreed-upon activities. These documents may include invoices, bills of lading, certificates of origin, and other relevant paperwork.
L Cs come in different types, including revocable and irrevocable, confirmed and unconfirmed, transferable and non-transferable, among others. The terms and conditions of the L C are defined in detail in the agreement between the buyer and the seller, specifying the conditions under which payment will be made and any necessary deadlines.
In summary, an L C is a written guarantee issued by a bank to ensure payment to an exporter upon compliance with the specified terms, providing a secure way to conduct international trade and build confidence between parties involved in cross-border transactions.
Common Misspellings for L C
Similar spelling words for L C
- C,
- la,
- b.c.,
- n.c.,
- L,
- DC,
- sc,
- la.,
- nc,
- cl,
- -ly,
- s.c..
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