Forfaiting Glossary

Glossary Items beginning with : L


Documentary Letter of Credit.


The use of goods in exchange for periodic rentals paid to the owner.

Legal Opinion

ITFA recommends that a legal opinion is obtained when dealing with unfamiliar territories given that there are local variations to the law relating to negotiable instruments. Refer to Market Practice Committee Bulletin No. 4 for further guidance.

Letter of Credit

Any arrangement whereby an entity (the issuing bank) acting at the request and on the instructions of a customer (the applicant for the credit who is usually an importer) is to make payment to or to the order of a third party (the Beneficiary), or is to pay or accept bills of exchange, drawn by the Beneficiary. Normally governed by the UCP.


London Inter Bank Offered Rate.