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| A Letter of Credit is a legal undertaking in writing. This undertaking is issued by a bank (known as the issuing bank) given to the seller (beneficiary) at the request of the buyer (applicant), whereby the issuing bank undertakes to pay a certain sum of money to the named beneficiary upon presentation of compliant documents as stipulated in the Letter of Credit. The credit may call for the payment to be effected immediately - know as sight LC. Alternatively, it may call for payment at a future date - known as a deferred payment LC or for payment on the maturity of a duly accepted tenor Bills of Exchange - known as acceptance LC. |
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