Bonds, guarantees and standby credits: overview

This note explains the differences between bonds, guarantees and standby letters of credit. It describes the functions of different types of bonds and guarantees and the function of standby letters of credit. It considers the issues buyers, sellers and issuers or guarantors of these instruments should be aware of. This note also considers the use of uniform rules such as the International Chamber of Commerce (ICC) Uniform Rules and, in relation to standby letters of credit, the Uniform Customs and Practice for Documentary Credits (UCP).

Karen Spencer and Sarah Sabin of Gateley Plc

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