A bid bond is a type of bank guarantee that ensures that a contractor will enter into a contract at the bid price if selected, protecting the project owner from loss.

A revolving bank guarantee enables the beneficiary to draw funds multiple times, up to a specified limit, within the guarantee's validity period.

A letter of credit is a financial document provided by a bank that guarantees payment to a seller, provided that the seller meets specific terms and conditions.

The primary parties in a letter of credit transaction are the buyer (applicant), the seller (beneficiary), and the issuing bank that provides the credit.

A commercial letter of credit is commonly used in international trade to facilitate transactions between buyers and sellers from different countries.

A revolving letter of credit allows the buyer to draw multiple times up to a specified limit, making it suitable for ongoing transactions.

The issuing bank's primary role is to ensure payment to the seller (beneficiary) as long as the conditions outlined in the letter of credit are met.

If the buyer fails to fulfill their obligations, such as making payment or providing the necessary documents, the letter of credit is typically voided, and the seller cannot claim payment.

To receive payment under a documentary letter of credit, the seller must present specific documents, including shipping documents, insurance certificates, and a commercial invoice, as stipulated in the letter.

For a letter of credit to be honored, the documents submitted must match the requirements specified in the letter exactly, including dates, amounts, and descriptions.