Letter Of Credit

A letter addressed by a bank, at the insurance and responsibility of a buyer of merchandise, to a seller, authorizing him to draw drafts to a stipulated amount under specified terms and undertaking conditionally or unconditionally to provide eventual payment for drafts. An open or sealed letter from a merchant in one place, directed to another in another place or country, requiring him that if a person therein named or the bearer of the letter, shall have occasion to buy commodities or to want money to any particular or unlimited amount, either to procure the same or to pass his promise, bill or other engagement for it, the writer of the letter undertaking to provide him the money for the goods, to repay him by exchange, or to give him such satisfaction as he shall require, either for himself or the bearer of the letter.