What is the full form of SLBC
Stand-by Letter of Credit
Stand-by letter of credit. 1. Concept and characteristics: The legal character of the stand-by letter of credit is a letter of credit and includes a promise to pay (promise to pay) by the bank issuing the credit. The peculiarity of Stand-by Letters of Credit is that they are used as instruments similar to guarantees, ie they are generally not used: With Stand-by Letters of Credit, goods-related obligations (e.g. the fulfillment of sales contracts with regard to the delivery, the Payment or guarantee) are secured (guaranteed) by a letter of credit, as are obligations to repay loans. In principle, Stand-by Letters of Credit can be opened irrevocably or revocably, unconfirmed or confirmed as well as transferable. Stand-by Letters of Credit have their origins in the USA, where the guarantee as a payment obligation is not known to replace the usual and necessary guarantees in foreign trade.
2. Stand-by Letter of Credit as a pure guarantee instrument: In the pure form of the stand-by letter of credit, the payment of the issuing bank is not triggered by submitting (dispatch) documents, as is the case with the other types of letters of credit. With this form of the stand-by letter of credit, the beneficiary's claim to payment is justified by a written statement, which the beneficiary himself or a (neutral) third party in accordance with the payment terms defined in the stand-by letter of credit. Issues (guarantee) requirements (bank guarantees).
3. Stand-by Letter of Credit as a documentary guarantee instrument: Forms of stand-by letters of credit are increasingly appearing that not only have the character of a guarantee, but also serve to secure payment for export transactions and that - like the other types of letters of credit - also have a documentary character (so-called documentary stand-by letters of Credit). In the case of such forms, the beneficiary exporter only receives payment from the stand-by letter of credit if he
(1) Submit the declaration defined in the Stand-by Letter of Credit (to be issued by himself or by a third party) and also
(2) Submit the (dispatch) documents as they normally appear with the other types of letters of credit and as they are specified in the conditions of the stand-by letter of credit in each individual case.
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