Compare letters of credit to introduce the letter of guarantee and point out the difference between

1) The payment responsibilities of banks are different. In the L/C business, the issuing bank bears the primary liability for payment, while the guarantee bank included in the bank may bear the primary payment liability or the secondary payment liability.

2) The basis of bank payment is different. In the L/C business, the issuing bank pays on the basis of the documents submitted by the beneficiary that meet the terms of the L/C, while in the bank guarantee business, the guarantor bank pays on the basis of the default statement and the statement of claim submitted by the beneficiary.

3) The scope of use is different. Letters of credit are mainly used for international goods**, and the scope of use of bank guarantees is much greater than that of credit blind certificates.

1. The payment responsibility of the bank is different: in the L/C business, the issuing bank bears the primary payment responsibility; In the bank guarantee business, the demand guarantee bank bears the primary payment liability, while the conditional guarantee bank bears the secondary payment liability.

2. The scope of application is different: the letter of credit business is generally only applicable to the sale and purchase of goods, while the bank guarantee is more used for international project contracting, bidding and bidding, borrowing and lending and other businesses in addition to the purchase and sale of goods, so the scope of application is wider;

3. Different requirements for documents: the shipping documents under the letter of credit are the basis for payment, the bank can refuse to pay if the documents do not match, and the documents under the bank guarantee are not the basis for payment, and the payment is generally based on the claim or other documents;

4. Whether financing is different: the beneficiary under the letter of credit can obtain financing through negotiation, while the documents under the bank guarantee do not become the basis for foreign exchange claim, nor can it be used as a mortgage loan, and the beneficiary cannot obtain financing;

5. Different from the contractual relationship: the letter of credit and the contract are two completely independent contracts; On the other hand, when the beneficiary submits a written statement or proof on the grounds that the other party is not performing the contract, the bank generally has to prove the non-performance, and if the two parties disagree, the guarantor bank will be implicated in the contract dispute between the two parties. Some countries, such as the United States and Japan, prohibit banks from intervening in commercial disputes by law, so banks are not allowed to issue bank guarantees.

Legal basisArticle 13 of the Measures for the Settlement of Domestic Letters of Credit.

After the L/C is issued, if the documents specified in the L/C are submitted to the issuing bank and meet the terms of the L/C, the issuing bank shall perform the following obligations:

a) For L/C at sight, payment at sight;

2) For the deferred payment of the letter of credit, the payment shall be made on the maturity date specified in the letter of credit;

3) For the negotiation of the letter of credit, payment shall be made to the negotiating bank on the maturity date specified in the letter of credit.

The differences between bank guarantee and letter of credit are as follows: 1. Bank payment terms: the purpose of letter of credit is to ensure the normal conduct of transactions; The purpose of a bank guarantee is to minimise losses in the event that a transaction fails to proceed as planned; 2. Scope of application:

Letters of credit are generally used for the sale and purchase of goods; Bank guarantees are generally used for goods sales, loans, project contracting, bidding, etc.; 3. Materials required: The letter of credit is a letter of credit that needs to be provided by the performing party on a complete letter of credit.

Article 14 of the Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Cases Involving Disputes over L/C: In the course of hearing L/C fraud cases, the people's courts may, when necessary, try the L/C disputes together with the underlying transaction disputes.

Where a party sues on the grounds of underlying transaction fraud, the issuing bank, the negotiating bank, or other interested parties in the legal relationship of the letter of credit related to the case may be listed as a third party; Third parties may apply to participate in the litigation, and the people's courts may also notify the third party to participate in the litigation.