Letter of Credit (L/C)
A bank document guaranteeing a seller’s payment upon meeting certain conditions.
Detailed Description
Letter of Credit (L/C)
What is a Letter of Credit (L/C)?
A Letter of Credit is a financial document issued by a bank guaranteeing payment to a seller for goods or services, provided specific terms are met.
What are the primary purposes of using a Letter of Credit?
The primary purposes are to facilitate international trade and provide security to both buyers and sellers in transactions.
What is the difference between a revocable and an irrevocable Letter of Credit?
A revocable L/C can be altered or canceled without notice, while an irrevocable L/C cannot be changed without agreement from all parties.
Who are the key parties involved in a Letter of Credit transaction?
The key parties include the applicant (buyer), beneficiary (seller), issuing bank, advising bank, and confirming bank.
What are some common uses of Letters of Credit in real estate?
Common uses include construction financing, lease agreements as security deposits, and assuring payment in property transactions.