Document background
The Acceptance LC is a crucial trade finance instrument used when parties require deferred payment terms in international trade transactions. This document type is particularly relevant under New Zealand law, where it combines local legal requirements with international banking practices (UCP 600). An Acceptance Letter of Credit provides a mechanism whereby the issuing bank commits to accept time drafts drawn by the beneficiary (seller) and pay them at maturity, typically 30, 60, or 90 days after presentation of compliant documents. This arrangement offers sellers the security of a bank's payment commitment while providing buyers with deferred payment terms, making it particularly valuable in cross-border trade where parties may not have established business relationships.
