Difference letter of credit and bank guarantee

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Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2014 What is the Difference between Letter of credit or Documentary credit and Bank Guarantee?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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10 January 2014 please refer http://howtoexportimport.com/Difference-between-Letter-of-credit-and-Bank-Guara-472.aspx

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2014 This is Ok but how can one different both in two or three lines

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P V Ram

P V Ram (Expert)
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10 January 2014 Letter of credit is an assurance given by a banker on behalf of its customer to another banker (of the party) / party indicating that amount would be paid to the banker (of the party) / party upon fulfilment of the conditions as per the terms of lc.

BG also vests ob the beneficiary similar rights as in case of LC

However, LC is mostly used in cases of materials related transactions and BG in cases of services related transactions.

Thanks!

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2014 Ok you mean to say BG holder will have the same Rights and condition as available with the LC beneficiary inrespect of receiving Payment.Correct?

P V Ram

P V Ram (Expert)
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11 January 2014 Of course! Subject to fulfilment of conditions.

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2014 No.LC holder and BG holder are not having the same condition for getting payment.Do you know how? See LC holder will have payment only on fulfillment of condition of LC whereas the BG holder will have payment only on the breach of condition of BG by for which the BG is given(by the BG provider) which Correct!

What are the types of Letter of Credit /Documentary Credit?