A “Letter of Credit Issuance Agreement” is a contractual agreement between a bank (the L/C issuer) and its customer (the L/C applicant) outlining the terms and conditions under which the bank agrees to issue a Letter of Credit (L/C) on behalf of the customer in favor of a beneficiary (the seller or exporter).

This agreement establishes the framework for the issuance of the L/C, detailing the roles, responsibilities, obligations, and liabilities of each party involved in the transaction. Actually, it is a critical document that formalizes the relationship between the issuing bank and the customer, providing a structured and transparent framework for the issuance and management of Letters of Credit, ensuring compliance with banking regulations, international trade practices, and contractual obligations while safeguarding the interests of all parties involved in the transaction.