An SLOC is used within international trade or high value agreements where the outcome may be a dispute and the potential of litigation and further action may be difficult to enforce. This may be due to jurisdictional or related enforcement difficulties. An SLOC will in effect guarantee that payment to the ultimate beneficiary or intended recipient of funds will be made. On a commodities transaction where there is the agreement to pay for the underlying goods in 60 days and this is not made then with an SLOC; having the backdrop of a financial guarantee allows it to be called upon if the agreed conditions are not fulfilled. This is usually done on presentation of the SLOC to the financial institution that has provided it.