A letter of credit is a financial instrument generally used to facilitate contracts.
How they work: The "Account Party" makes an arrangement with a bank, and the bank issues a Letter of Credit to the "Beneficiary Party." When the contract requires payment, the Beneficiary can go to the bank and get its money.
Key Sources for information on Letters of Credit include -
(a) John F. Dolan's The Law of Letters of Credit: Commercial and Standby Credits (A.S. Pratt & Sons) and Burton McCullough's Letters of Credit (LexisNexis/Matthew Bender).
(b) Publications by the International Chamber of Commerce, most notably Uniform Customs and Practice for Documentary Credits (UPC 500).
(c) Article 5 of the Uniform Commercial Code, which is the basis for the Letter of Credit laws in most states (see "Uniform Commercial Code").
(d) International Standby Practices (ISP). ISP98 was drafted by the Institute of International Banking Law & Practice, Inc.. It was adopted by the ICC and is sold as ICC Publication No. 590.
Arbitration: The International Center for Letter of Credit Arbitration (ICLOCA) provides rules for arbitration and other kinds of alternative dispute resolution related to Letters of Credit. You can send email to ICLOCA at icloca@IIBLP.org.