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Advantages of Letters of Credit vs. Surety Bonds

OnDemand Webinar (88 minutes)

Learn the advantages and disadvantages of using a bond versus a letter of credit.

This topic will explore the similarities and differences of letters of credit with surety bonds as a performance assurance or credit enhancement. Each has unique characteristics, wording, pricing, procedures and bodies of law that apply to them. This topic will discuss how each are priced and risk assessed, how they work and are commonly used in practice, what are the advantages and disadvantages of using a bond vs. a letter of credit to assure performance or payment of various types of contracts and obligations, and what are the problems and legal pitfalls each presents.

Authors

Carter H. Klein, Jenner & Block LLP

Agenda

Core Differences of What Is a Letter of Credit vs. a Bond

Frequent Uses of Bonds and Letters of Credit

• Uses of Letters of Credit

• Uses and Types of Bonds

Who Are the Parties to a Letter of Credit vs. a Bond? The Parties Are to a Certain Extent Parallel

How to Choose Between Bond vs. Letter of Credit

• From the Applicant or Principal's Perspective

• From the Beneficiary's or Obligee's Perspective

Traps for the Unwary in LC and Bond Claim Practice

Legal Regimes That Govern LCs and Bonds

How to Choose a Reliable Issuer of an LC or Bond

Where to Look for Help and Who to Ask for LC and Bond Questions

Reimbursement Issues

Subrogation Issues

Tailoring a Bond or LC

Severally Issued or Syndicated Bonds or LCs