Payment, Acceptance and Negotiation Under Letters of Credit
The ways a credit can be made available — sight payment, deferred payment, acceptance and negotiation.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
UCP 600 Article 6(b) requires a credit to state whether it is available by sight payment, deferred payment, acceptance or negotiation. Sight pays on complying presentation; deferred payment and acceptance pay at a future date (acceptance with a draft); negotiation means a nominated bank advances funds before reimbursement.
| Rule | UCP 600 Art. 6(b) |
|---|---|
| Field | MT700 41A/41D 'BY ...' |
| Drafts | Required for acceptance |
The four types
- Sight payment: paid on compliance.
- Deferred payment: paid at maturity, no draft.
- Acceptance: draft accepted, paid at maturity.
- Negotiation: nominated bank purchases drafts/documents.
Why it matters
- Determines when cash arrives.
- Determines whether a draft is needed.
- Affects discounting options.
Sources
General guidance, not legal advice. Your bank examines documents independently.
Related guides
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