Stand-by Letters of Credit

Dorax Investments offers stand-by letters of credit (SBLC) in order to perform a guarantee function, i.e. operating only for infringed cases of contract.

A stand-by letter of credit differs from a bank guarantee because this SBLC can be subject to the respective unified rules and customs of the documentary letter of credit (UCP 600) stipulating the relevant specified standards of examining documents irrespective of the guarantee.

Therefore, if the beneficiary's guarantee request is accompanied with documents evidencing performance of its obligations, so the bank must confirm these documents and, if possibe, its compliance with the requirements of the guarantee itself. Under usage of this stand-by letter of credit these documents should meet the UCP600 standards thus increasing the degree of protection significantly.

Similarities and differences between letters of credit and guarantees: