„Commercial Letter of Credit“

An instrument by which a bank substitutes its credit for that of a customer to enable him to finance the purchase of goods or to incur other commitments. The bank issues a letter (or document) on behalf of its client to a supplier and agrees to pay them upon presentation of documentary evidence that the supplier has performed in accordance with the terms of the letter of credit.

Source:

Mann, Ronald J. “Payment Systems and Other Financial Transactions: Cases, Materials, and Problems.” Wolters Kluwer Law & Business, 5th Edition, 2011, pp. 540-561.