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|Letter Of Undertaking|
A letter issued by a Protection and Indemnity Club or other financial organization guaranteeing reimbursement to a party for loss or damage (usually to cargo). It is a more informal form of security and less expensive than posting a bond to guarantee performance. However, it is only as good as the good faith of the entity issuing the letter as there is no third party (such as a bank or insurance company) to guarantee performance.