A contract written by a bank to guarantee that the bank will pay the exporter the amount of money owed by the importer is called a:

Question

Quizplus · Accepted Answer

A letter of credit is a written commitment issued by a bank to a seller (exporter) that guarantees payment for goods or services provided to a buyer (importer). The bank guarantees the payment on behalf of the buyer, so if the buyer fails to pay, the bank will cover the cost. Therefore, option A is the correct answer. Options B, C, and D do not accurately describe this type of contract.

A Contract Written by a Bank to Guarantee That the Bank