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Dear All,

What are the differences between standby lc and bank gaurantee?

Thanks!

hello,

standby letter of credit is alike bank guarantee.

A guarantee of payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions, and are proof of a buyer's credit quality and repayment abilities. The bank issuing the SLOC will perform brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then send notification to the bank of the party requesting the letter of credit (typically a seller or creditor).

A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

in the meaning of SBLC and Gtee there is no difference, i.e. the payment under SBLC is due only if the applicant will breach on his obligations under contract.

Dear all
The main differences between the above are the rules which they are issued under:
American institutions do not recognise Guarantees. They will only accept SBLCs and as such the rules ISP98 came about. Guarantees are issued in accordance with URDG758 and SBLCs may be issued under ISP98 or UCP600. If you have the opportunity, try and attend a course on Guarantees, especially if Dr Georges Affaki attends. He is a worldwide renown expert who will argue that there are great differences betweeen Guarantees and SBLCs.

BR J