Document background
The Letter of Credit and Standby Letter of Credit are essential financial instruments used in commercial transactions where payment security is paramount. These documents are particularly crucial in international trade scenarios where parties may not have established business relationships or when significant sums are involved. Under Austrian jurisdiction, these instruments are governed by the Austrian Banking Act, Commercial Code, and relevant EU regulations, while also following international banking practices such as UCP 600. The document typically includes detailed information about the parties involved, payment terms, required documentation, and conditions for payment. Letters of Credit serve as a primary payment mechanism in trade, while Standby Letters of Credit function as security instruments, only drawn upon in case of default or non-performance.
