Commercial letters of credit are guarantees that are issued to cover contingencies that are potentially more severe and less predictable than those covered by standby letters of credit.

Question

Quizplus · Accepted Answer

Commercial letters of credit are primarily used to facilitate international trade by guaranteeing payment to the seller upon fulfillment of specified terms, while standby letters of credit serve as a backup payment mechanism for financial or performance obligations, potentially covering more severe and less predictable contingencies.

Commercial Letters of Credit Are Guarantees That Are Issued to Cover