There are a number of terms commonly used in standby practice and the UCP that are ambiguous, An example is the term original.
Other rules establish minimum times for examination, establish the right of the beneficiary to cure, clarify the effect of prior presentations under the same or a similar standby, provide clear rules regarding demands to extend or pay, and address cover instructions.
While this result may be acceptable under a commercial letter of credit where the beneficiary has control of the goods and the applicant presumably wants them, it is rarely acceptable under a standby. The ISP abolishes the troublesome distinction of determining the cause of such a closure and establishes a rule that allows the beneficiary additional time but also permits the issuer to designate another place for presentation as long as it is reasonable.
This approach reflects the need for standby rules to receive acceptance from rating agencies, insurance commissioners, investment bankers, government procurement officers, and sophisticated corporate parties and their counsel.
The existence of standby rules will increase the standardization of clauses and types of documents and will lead to specialized message types for electronic international financial communications.
A Performance Standby supports an obligation to perform other than to pay money and includes an obligation to pay for losses arising from a default of the applicant in completion of the underlying transaction.
An Advance Payment Standby supports an obligation to account for an advance payment made by the beneficiary to the applicant.
A Bid Bond/Tender Bond Standby supports an obligation of the applicant to execute a contract if the applicant is awarded a bid.