LETTER OF CREDIT

Entity to itself. Not Strictly contractual. It is not a third party beneficiary contract and neither function as assignment to the beneficiary. It is not negotiable. Properly use, it can be a suretyship or guarantee contract.

DEFINITION

Written instrument whereby the writer requests or authorizes the addressee to pay money or deliver the goods to a third person and assumes responsibility for payment of debt therefor to the addressee. It changes the nature as different transactions occur and if carried through to completion ends up as a binding contract between the issuing and honoring banks without any regard or relation to the underlying contract or disputes between the parties.