{"id":3023,"date":"2018-10-18T07:24:57","date_gmt":"2018-10-18T11:24:57","guid":{"rendered":"http:\/\/www.letterofcredit.biz\/?p=3023"},"modified":"2019-04-06T10:42:13","modified_gmt":"2019-04-06T14:42:13","slug":"what-are-the-differences-between-standby-letters-of-credit-and-commercial-letters-of-credit","status":"publish","type":"post","link":"https:\/\/www.letterofcredit.biz\/index.php\/2018\/10\/18\/what-are-the-differences-between-standby-letters-of-credit-and-commercial-letters-of-credit\/","title":{"rendered":"What are the Differences Between Standby Letters of Credit and Commercial Letters of Credit?"},"content":{"rendered":"<p>Standby letters of credit and commercial letters of credit are two main documentary credit types used in international trade transactions.<\/p>\n<p>A standby letter of credit is a bank\u2019s undertaking of fulfilling the applicant\u2019s obligations.<\/p>\n<p>In case, the applicant can\u2019t fulfill contractual obligations against the beneficiary of the standby letter of credit, then the beneficiary can apply to the issuing bank for full compensation.<\/p>\n<p>A commercial letter of credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.<\/p>\n<p>Commercial letters of credit are mainly used as a primary payment method in export and import of the tangible goods in international trade.<\/p>\n<p><span style=\"color: #ff9900;\"><strong>Table 1: Differences Between Standby Letter of Credit and Commercial Letter of Credit<\/strong><\/span><\/p>\n<p><img decoding=\"async\" class=\"alignleft size-full wp-image-3029\" src=\"http:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit.png\" alt=\"Differences between standby letter of credit and commercial letter of credit\" width=\"775\" height=\"611\" srcset=\"https:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit.png 775w, https:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit-300x237.png 300w, https:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit-768x605.png 768w, https:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit-696x549.png 696w, https:\/\/www.letterofcredit.biz\/wp-content\/uploads\/differences-between-standby-letter-of-credit-and-commercial-letter-of-credit-533x420.png 533w\" sizes=\"(max-width: 775px) 100vw, 775px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Common Characteristics of Standby Letters of Credit and Commercial Letters of Credit:<\/strong><\/p>\n<p>Both standby and commercial letters of credit;<\/p>\n<ul>\n<li>are irrevocable and conditional payment promises, which is given by a trusted financial institution mostly by a bank.<\/li>\n<li>independent payment mechanisms, whatever contracts they may base.<\/li>\n<li>are governed by ICC&#8217;s rules, ISP 98 and UCP 600, respectively.<\/li>\n<li>have a documentary nature.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Standby letters of credit and commercial letters of credit are two main documentary credit types used in international trade transactions. A standby letter of credit is a bank\u2019s undertaking of fulfilling the applicant\u2019s obligations. In case, the applicant can\u2019t fulfill<\/p>\n","protected":false},"author":1,"featured_media":3033,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55,54,56],"tags":[365,24,21],"class_list":["post-3023","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-letter-of-credit","category-letter-of-credit-types","category-standby-letter-of-credit","tag-commercial-letter-of-credit","tag-letter-of-credit-types","tag-stand-by-letter-of-credit"],"_links":{"self":[{"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/posts\/3023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/comments?post=3023"}],"version-history":[{"count":0,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/posts\/3023\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/media\/3033"}],"wp:attachment":[{"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/media?parent=3023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/categories?post=3023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.letterofcredit.biz\/index.php\/wp-json\/wp\/v2\/tags?post=3023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}