Comparing Types of Credit Support in Sale of Goods Transactions Checklist

Summary

This checklist in the form of a chart compares the characteristics of various credit support options that can be used by a party to a sales of goods agreement to support its contractual obligations, such as guaranties, commercial letters of credit, standby letters of credit, sureties (including performance bonds), and comfort letters. With sales of goods transactions, particularly international ones, sellers are reluctant to deliver goods without an assurance of payment from their buyers. As such, sellers commonly look to mitigate this risk through credit support options such as guaranties, commercial letters of credit, standby letters of credit, sureties, and, to a lesser extent, comfort letters.