irrevocable documentary acceptance credit

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A form of irrevocable confirmed letter of credit in which a foreign importer of UK goods opens a credit with a UK bank or the UK office of a local bank. The bank then issues an irrevocable letter of credit to the exporter, guaranteeing to accept bills of exchange drawn on it on presentation of the shipping documents. Once the letter of credit has been drawn up, the importer has to ‘accept’ that he or she will pay, by signing the acceptance.

Subjects: Financial Institutions and Services.

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