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Guarantee is a promise (or undertaking) given by a bank on behalf of a client to another party (the beneficiary) to pay a stated sum of money if the client (or someone else) fails to carry out an obligation (the default event must be backed by documentary evidence)
However in trade, bank guarantees essentially serve the same purpose as stand by letter of credit. A standby letter of credit (SBLC) is a lender's guarantee of payment to an interested third-party in the event the client defaults on an agreement.