SILENT CONFIRMATION AND STAND BY L/C.

QUERY FROM ELEGANT
Silent L/C & STAND BY L/C

I have 2 questions. They are as below.

Please define: (i) SILENT L/C. (ii) STAND BY L/C.

Thanking you in advance.

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COMMENT
Silent Confirmation & Stand-by LC

Hi,

Silent LC

I’m afraid that the phrase “Silent LC” does not exist in practice. You may have mistaken it with “Silent Confirmation” or “Silent LC Confirmation”.

Different from a confirmed LC where the nominated bank is authorized to add confirmation to the LC, an unconfirmed LC does not authorize any bank to add confirmation to the LC. However, if requested by the exporter and a certain bank is willing to, that bank may add its confirmation to the LC.

To add confirmation to the LC without the authorization by the issuing bank is called “Silent
Confirmation”.

“Silent Confirmation” or “Silent LC Confirmation” is not governed by UCP 600.

Stand-by LC

Not like a commercial LC, a stand-by LC, which is structured like a special type of LC, serves the same purpose as a guarantee, i.e., it is an instrument of payment security. Originally, stand-by LCs were developed in USA where banks are not allowed to issue guarantees. However, so far stand-by LCs have gained popularity, especially in oil trading business.

Stand-by LCs may be issued subject to ISP 98 or UCP 600.

Elegant, you may find the answer yourself by googling the said words.

Best Regards,
Nguyen Huu Duc …