Stand By Letter of Credit


A Standby Letter of Credit is usually given by banks or financial institutions to vouch for the integrity of a seller and purchaser, acting as an intermediary. The buy and sell agreement is made between the two parties that both must uphold their part. This Standby Letter of Credit is usually not executed if both involved parties hold true to their agreement.

This letter serves as a proof for the people to take their money from the bank or financial institution which are held as responsible for the person who took the money from the recipient. The letter should also mention up to how much amount they can give to the recipient, and they can also ask to bring any documents at the time of collecting the money from the bank or financial institution along with this letter. If necessary, the writer can mention the last date or due date for taking the funds.

Sample Stand By Letter:


Bosnia Garments Inc.

New York

Date: July 17, 2017

Irrevocable Standby Letter of Credit # {93874321}


Caring Homes,

23 Maple Street,

Manor District, FL 32463.

James S. Smith,

4205 White Oak Drive,

Lee S Summit, MO 64063.

Account Party:

Barry Andrews,

New York

Dear Sir,

We, the First United Bank of USA hereby open our irrevocable and unconditional standby credit for Mr. James S. Smith in favor of Caring Homes with the total of not more than $100,000 to be paid by one or both requests at sight. The party has notified First United Bank that with this credit letter issued, the obligations presented for the agreed loan agreement is confirmed as entered by Caring Homes and the borrower as dated on June 8, 2017. The bank hereby confirms the said loan agreement and its validity with this credit letter taken as surety and guarantee, which will be serviced with the assets of the borrower. As mentioned above we would only pay $1,00,000 as per the agreement and we are not responsible for the amount more than that.

The issuance of this credit letter is in accord with the standard custom and practices related to documentary credits as per 1994 version as well as the international chamber of commerce series #503. You can visit the bank after receiving this letter and can collect the money you lent to James. While you come to the bank for collecting the money bring this standby letter as a matter of proof and there is nothing else needed. If you are having any doubts regarding this letter, you can contact us by calling to 526314 or you can visit us at the above address or mail us your queries to It is a pleasure doing business with you. Thank you.

Yours truly,

Barry Andrews

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