• standby



    Generally, standby letters of credit are used to support the applicant’s position in a contractual relationship where the applicant of the standby letter of credit is expected to fulfill an obligation. In case of failure of the applicant, the beneficiary of the standby letter of credit can draw the credit amount from the issuing bank by supplying required documents.

    It should be stressed once more that standby letters of credit are separate transactions from the underlying contracts on which they may be based.

    We shall study about this article further, in detail, in our next post.


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