What is a Documentary Letter of Credit (DLC)?
On occasion, the University requires overseas suppliers to design, construct and assemble specialised equipment. Where a considerable sum of money is involved, the supplier may require a guarantee of payment. A Documentary Letter of Credit provides the necessary guarantee. A Documentary Letter of Credit is issued by a bank, guaranteeing payment to the supplier on condition that the correct documents (specified in the terms and conditions outlined on issue) are presented. The University currently utilises a line of credit of $500,000 with the Bank of America to accommodate equipment purchases requiring a DLC. All parties in a documentary credit transaction deal with documents, not with goods. The Bank of America, on behalf of the University, specifies the documents to be presented by the supplier. Provided all documents are presented and, conform at face value to the credit requirements, they will be accepted.
