Standby letters of credit are guarantees issued to cover contingencies that are potentially more severe and less predictable than contingencies covered under trade-related or documentary letters of credit

Question

Quizplus · Accepted Answer

Standby letters of credit are typically used to cover a wide range of financial transactions and obligations, including payment guarantees, performance bonds, and insurance policies. These contingencies are often more complex and less predictable than those covered under traditional trade-related or documentary letters of credit.

Standby Letters of Credit Are Guarantees Issued to Cover Contingencies