Letters of credit has been widely used in various trade finances, especially in the cases where the buyer and the seller are not known to each other, are living in different countries or have different laws to trade. One such letter of credit is Standby credit.
Standby letter of credit (SBLC/SLOC)Tumblr
Now,generally when two parties come into a contract to purchase and sell a product,the seller promises to deliver the goods on the payment of a specified amount.At times this payment can be agreed to be paid at a later date on thefulfilment of certain terms and conditions. But it may so happen that evenafter being bound by a contract the purchaser refuses to make the payment orbecomes unable to make the payment after the delivery of goods. To mitigate theloss that the seller may incur under the aforesaid circumstances, the partiesmay use a standby letter of credit.
