LETTER OF CREDIT Definition

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LETTER OF CREDIT (LOC) is a legal document issued by a buyer's bank that upon presentation of required documents payment would be made. Usually confirmed by the sellers bank, protection is given to the seller that payment will be made if the goods are shipped correctly, and protection is given to the buyer that the goods will be shipped before payment is made.

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ENCRYPTION is the scrambling of data so that it is meaningless to anyone but the intended recipient, who has the key to unscramble the data to its original form.

DISHONORED NOTE is a note on which a debtor has defaulted.

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