Jurisdiction(s):
United Kingdom
United Kingdom
Key definition
Standby letter of credit definition What does Standby letter of credit mean? A standby letter of credit is a bank’s irrevocable, independent undertaking to pay a beneficiary on a compliant demand if the applicant fails to perform or pay. It operates on documents (for example, a demand and certificate of default), not proof of actual breach. In UK and Irish practice it serves the same function as an on-demand guarantee or performance bond, and the terms are often used interchangeably. A standby letter of credit is commonly issued subject to UCP 600 or ISP98. Key legal features include: autonomy from the underlying contract; payment against conforming documents; limited defences for the issuer; and...
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Irrevocable standby letter of credit: bank precedent with demand appendix (England and Wales law; ISP98 or UCP600)
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Precedents
[ To be printed on the headed paper of the issuing bank ]
To: [ insert name and address of beneficiary ]
Date: [ insert date ]
Dear [ insert organisation name ]
standby letter of credit number [ insert number ]
- At the instruction of, and for the account of, [ insert name of applicant ] of [ insert address of applicant ] (the Principal debtor), we issue in your favour this irrevocable standby letter of credit (the Standby Letter of Credit).
- Our total aggregate liability to you under this Standby Letter of Credit is limited to a maximum of [ insert maximum aggregate liability and currency ].
- This Standby Letter of Credit will lapse at the close of banking hours at our offices on [ insert expiry date ] (the Expiry Date). We shall have no obligation to honour any demand presented under this Standby Letter of Credit that reaches us after that time on the Expiry Date.
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Web page updated on 22/05/2026
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