This is a Standby Letter of Credit to be issued by a PRC Issuer for a Beneficiary on request by an Applicant. 

It works as a guarantee to ensure that payment for a deal is made. 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.

The Bank would then issue this Standby Letter of Credit to act as an assurance for the parties to trust each other. In other words, the Issuing Bank acts as a guarantor for the Applicant in order to obtain a contract by assuring the Applicant’s obligation to the Beneficiary would be fulfilled, through this Letter of Credit Standby / Trade Letter of Credit. 

Where the Applicant escapes liability, this letter of credit would avail the Beneficiary to claim payment from the Bank. The bank is only obliged to pay only in the worst-case scenario, hence the name of a “Standby” Letter. 

Looking for a Standby Letter of Credit issued by a PRC Issuer? This letter serves as a guarantee for payment in the event of an agreement or deal between parties with unknown credibility. The Issuing Bank acts as a guarantor for the Applicant to ensure that their obligation to the Beneficiary is fulfilled. This letter of credit is particularly important in international trading, as it helps establish trust and sets governing laws and jurisdictions. The Letter should specify the party names, maximum amount, payment date, and effective period. Contact us for assistance in obtaining an SBLC and fulfilling your financial needs.

How to use this Document? 

Steps to Use Standby Letter of Credit Document:

1. Understand the purpose of Standby Letter of Credit: This document is a guarantee that ensures payment for a deal will be made. It is commonly used when two parties enter into an agreement or a deal, and they do not know each other’s credibility well enough.

2. Review the letter: The Standby Letter of Credit outlines the terms of the agreement, including the maximum amount, currency, payment date, effective period, and expiry date. Make sure to read it carefully and understand all terms and conditions.

3. Identify parties: The letter should clearly state the names of the parties involved: the Issuing Bank, Applicant, and Beneficiary.

4. Sign and return the document: Once both parties have reviewed and agreed to the terms, they should sign and return a copy of the document. To avoid any future disputes, both parties may wish to have their signatures witnessed.

5. Record any amendments: 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.

6. Use in international trading: This Standby Letter of Credit is particularly important in international trading, where it would be even more difficult for companies to know each other’s credibility well, and the different laws and regulations that they are bound to.

7. Gain trust and set jurisdiction: This Standby Letter of Credit helps both parties gain trust, with the issuing bank involved as a guarantor. It also sets the responsible jurisdiction and governing laws, so as to prevent any disputes regarding the relevant laws.

8. Bank charges: All bank charges are for the Applicant’s account.

9. Compliance with laws: The Issuing Bank confirms that they have complied, and will at all times comply, with all applicable laws and regulations of the People’s Republic of China in relation to this Standby Letter of Credit.

10. Submit to jurisdiction: This Standby Letter of Credit is subject to the International Standby Practices 98, International Chamber of Commerce Publication No. 590 and where not inconsistent therewith shall be governed by and construed in accordance with the laws of [JURISDICTION_COUNTRY]. The Issuing Bank irrevocably agrees to submit to the non-exclusive jurisdiction of the courts of [JURISDICTION_COUNTRY].

Using this Standby Letter of Credit document can help ensure that both parties have a clear understanding of their obligations, gain trust, and prevent any future disputes.