A Documentary Credit, also known as a Letter of Credit, is a financial instrument used in international trade to ensure payment between a buyer and a seller. It is issued by a bank on behalf of the buyer, guaranteeing that the seller will receive payment as long as they provide the required documents, such as shipping receipts and invoices, that comply with the terms of the credit. This mechanism helps reduce the risk for both parties involved. The buyer is assured that payment will only be made if the seller meets the specified conditions, while the seller gains confidence that they will receive payment once they fulfill their obligations.