Demand for payment under Standby Letter of Credit issued by an Issuer for a Beneficiary. This is a demand letter from the beneficiary to the issuing Bank demanding for payment under the SBLC, which is similar to a guarantee. This letter is usually sent when the terms of the original SBLC are fulfilled and the applicant has failed to pay / default on its obligation.
The most common scenario for the Standby Letter of Credit to be issued is where two parties enter into an agreement or a deal, and they do not know each other’s credibility well enough.
This document should be carefully read by the Issuing Bank and the Beneficiary.
Both the Bank and Beneficiary should sign and return a copy, and once signed, both parties should get a copy. To avoid any future disputes, both parties may wish to have their signatures witnessed.
If either party wishes to amend the agreement in the future, both parties should agree to do so, and the original agreement and amendments should be recorded in writing and signed by both parties.
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