A standby letter of credit is actually a bank guarantee issued in the form of a letter of credit. It is the bank’s commitment to pay the guaranteed amount to the beneficiary under the letter of credit in case of a guarantee event (i.e. failure of an applicant of standby letter of credit to fulfill obligations towards the beneficiary). If, in the opinion of the beneficiary, his/her partner has violated obligations, he/she may use a standby letter of credit. As a rule, it is sufficient to provide a simple written application to the bank that the partner did not fulfill assumed obligations (often along with other documents during the term of the letter of credit and on specified terms). In case of fulfillment of obligations by the partner – the applicant of the letter of credit – the letter of credit shall lose its validity upon expiry.