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Hypothecation Certificate
Source:
Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
A
certificate attached to a bill of exchange drawn against a shipment of
goods, which describes the nature of the shipment and authorizes the banker
buying the bill to dispose of the goods in case payment or acceptance
of the bill is refused. The
hypothecation certificate, also known as a letter of hypothecation, is
given by the seller of the bill together with the bill of lading, insurance
certificate, and other documents, as further security to the buying bank.
Habitual
drawers of bills of exchange sometimes execute a general hypothecation
power which is applicable to all the bills which they may sell to their
bankers. This is held by
the purchasing bank.
See
LETTER OF CREDIT
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