A Letter of Credit (LC) is a financial instrument widely used in international trade. It is a written commitment from a bank, at the request of the buyer, to pay the seller a specified amount under specified conditions. This mechanism provides a secure and transparent means of ensuring payment, mitigating risks for both parties. LCs are often utilized to facilitate smooth transactions, especially when there is a lack of trust or unfamiliarity between the buyer and seller. The document acts as a guarantee, assuring the seller that payment will be made upon fulfilling the agreed-upon terms and conditions.