The time, or usance,
letter of credit provides for the exporter to
receive payment at a specified number of days
following acceptance of the draft which he has
drawn on the bank as his demand for payment
under the letter of credit. The word
acceptance in the context of a time letter of
credit means accepted for payment at a
specified future date. The number of days
specified cannot exceed six months after sight.
Upon acceptance of the time draft, the
bank’s liability for drawing under the letter of
credit has been satisfied and the draft becomes
another instrument, the banker’s acceptance.
Acceptance of the draft is the bank’s guarantee
of payment at the specified future date.
