Letter Of Credit

Pronunciation: /ˈlɛtər ʌv ˈkrɛdɪt/

Definitions of letter of credit

noun a document issued by a bank or financial institution guaranteeing payment to a seller on behalf of a buyer

Example Sentences

A1 A letter of credit is a document issued by a bank to guarantee payment for goods or services.

A2 When importing goods, a letter of credit can help ensure that the seller will receive payment.

B1 Businesses often use letters of credit to reduce the risk of non-payment in international trade transactions.

B2 Negotiating the terms of a letter of credit can be complex, requiring careful attention to detail.

C1 Understanding the legal implications of a letter of credit is crucial for international business dealings.

C2 Experienced traders know how to leverage letters of credit to secure favorable terms in their transactions.

Examples of letter of credit in a Sentence

formal The seller requested a letter of credit as a guarantee of payment from the buyer.

informal The seller wanted a letter of credit to make sure they get paid by the buyer.

slang The seller needed a letter of credit to cover their back with the buyer.

figurative The letter of credit acted as a safety net for the seller in the transaction.

Grammatical Forms of letter of credit

• plural: letters of credit
• comparative: more letters of credit
• superlative: most letters of credit
• present tense: issues a letter of credit
• future tense: will issue a letter of credit
• perfect tense: has issued a letter of credit
• continuous tense: is issuing a letter of credit
• singular: letter of credit
• positive degree: letter of credit
• infinitive: to issue a letter of credit
• gerund: issuing a letter of credit
• participle: issued letter of credit

Origin and Evolution of letter of credit

First Known Use: 1601 year

Language of Origin: English

Story behind the word: The term 'letter of credit' originated from the practice of merchants in ancient times sending physical letters to authorize payments on their behalf.

Evolution of the word: Originally used in the context of international trade, the term 'letter of credit' has evolved to encompass various forms of financial guarantees and payment mechanisms in modern banking and commerce.