Letters of Credit

Letters of credit are legal documents issued by a bank or financial institution, guaranteeing payment to a seller or beneficiary on behalf of a buyer or applicant, provided that certain conditions are met. The letter of credit typically specifies the amount of payment, the expiration date, and the documents required for payment to be made. Letters of credit are commonly used in international trade transactions to mitigate the risk of non-payment and to provide assurance to the seller that they will receive payment for goods or services provided. They can also be used in other contexts, such as construction projects or real estate transactions.