H & Q Importers arranged to have a French winery ship a large quantity of fine wine to the United States.By signing a ______________ H & Q authorized its bank to make full payment to the French winery if and when the wine arrives at the H & Q warehouse in Boston.

Question

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A letter of credit is a document issued by a bank guaranteeing payment to a seller of goods or services, provided that certain documents are presented to the bank. In this case, H & Q is the buyer and is authorizing their bank to make payment to the French winery once the goods (wine) arrive and certain documents are presented, ensuring that H & Q only pays for the goods they received.

H & Q Importers Arranged to Have a French Winery