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Legal Difference - There is a big legal difference between a bank guarantee and a Standby LC. A bank guarantee is an obligation subject to civil law whereas a standby LC is subject to banking protocols.
A Standby Letter of Credit is different from a Letter of Credit. An SBLC is paid when called on after conditions have not been fulfilled. However, a Letter of Credit is the guarantee of payment when certain specifications are met and documents received from the selling party.
A Standby Letter of Credit (SBLC / SLOC) is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is a payment of last resort from the bank, and ideally, is never meant to be used.
There are four types of Letters of Credit and they are given below. A revocable letter of credit. An irrevocable letter of credit. A standby letter of credit. Revolving letter of credit.
A standby letter of credit (SBLC) refers to a legal instrument issued by a bank on behalf of its client, providing a guarantee of its commitment to pay the seller if its client (the buyer) defaults on the agreement.
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An SBLC helps ensure that the buyer will receive the goods or service that's outlined in the document. For example, if a contract calls for the construction of a building and the builder fails to deliver, the client presents the SLOC to the bank to be made whole.
A letter of credit is used to provide security for a transaction such as a sale agreement. A standby letter of credit is often used to provide security for a long-term obligation such as a long-term construction project.
A standby letter of credit (SLOC) is a legal document that guarantees a bank's commitment of payment to a seller in the event that the buyer\u2013or the bank's client\u2013defaults on the agreement.
A standby letter of credit (SLOC) is a legal document that guarantees a bank's commitment of payment to a seller in the event that the buyer\u2013or the bank's client\u2013defaults on the agreement.
A Standby Letter of Credit (SBLC) is a guarantee that is made by a bank on behalf of their client, which ensures payment will be made even if their client cannot fulfill the agreement.

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