standby letter of credit (L/C)
Definition
Primarily a substitute for a performance bond or payment guaranty, this L/C is used mainly in the US where banks are legally barred from issuing certain types of guaranties. It serves as a parallel (collateral) payment source in case the primary source fails to meet its obligations in part or in full.
standby letter of credit (L/C) is in the Accounting & Auditing, Banking, Commerce & Finance, International Trade & Relations and Purchasing & Procurement subjects.
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