The most common form of the commercial letter of credit, the documentary credit is an arrangement for the safe negotiation of a payment and credit transaction, esp. in connexion with international deliveries of merchandise. The documentary credit covering merchandise consists of a written undertaking on the part of a bank to pay, on instructions from the buyer, a certain amount to the seller within a prescribed period and against surrender of stipulated documents covering the shipment of goods contracted for between seller and buyer, to accept said payment or to negotiate it, or to authorise another bank to make such payments or draught negotiations if the conditions are met. All instructions to open, confirm or advise of a documentary credit must list precisely the documents to be presented. Permissible documents include: bill of lading, insurance documents, trading invoice, consular invoice, certificate of origin, weight and quality certificates. A documentary credit can be revocable or irrevocable.

Unless expressly stated to the contrary it is regarded as irrevocable. The basis for the execution of documentary credit is provided by the «Uniform Customs and practise for Documentary Letters of Credit» (UCP) drafted by the International Chamber of Commerce in Paris.