Simple English definitions for legal terms
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SL/C stands for standby letter of credit, which is a type of letter of credit used to guarantee a monetary or non-monetary obligation. It is issued by a bank at the request of a customer, and it promises to pay a third party (the beneficiary) if the customer fails to fulfill their obligation.
For example, if a construction company is hired to build a new office building, the client may require them to provide a standby letter of credit to ensure that the work is completed on time and to the agreed-upon standards. If the construction company fails to meet these requirements, the bank will pay the client the amount specified in the SL/C.
Another example is when a supplier requires a buyer to provide an SL/C to ensure payment for goods or services. If the buyer fails to pay, the bank will pay the supplier the amount specified in the SL/C.
Overall, an SL/C is a useful tool for managing risk in business transactions, as it provides a guarantee of payment in case of default or non-performance.