What is stand by letter of credit
by Rohit Sharma Internet MarketerIf you want
to know what is stand by letter of credit then we mentioned a complete
details as a Stand by letter of credit, abbreviated as standby letter of
credit, refers to a legal document where a bank guarantees payment of a
particular amount to the seller if the purchaser defaults on the contract. A
standby letter of credit work as a security net for the shipment of physical
commodities or payment of full service to the seller, in the event that
something unforeseen prevents the purchaser from making the scheduled payment
to the seller. In such a situation, the standby letter of credit makes sure
that the necessary payments are made to the seller after completion of the
necessary obligations. A standby letter of credit is utilized in domestic or
international transactions where the buyer and the seller don’t know each
other, and it seeks to reduce the hazards include bankruptcy and insufficient
cash flow on the buyer’s side.
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Created on Oct 1st 2021 07:49. Viewed 270 times.