Letter of Credit Flashcards
1
Q
Letter of Credit
A
Tool given to the owner like labour and material payment bond with promise being for payment
2
Q
Letter of credit broader than bond
A
Can be used for second tier claimants
3
Q
Benefits
A
- Broader
- Faster (don’t need to find liability)
- Less expensive to obtain
4
Q
Common in US and Europe to circumvent
A
Holdback
5
Q
Circumvent holdback
A
instead of taking a percentage, you pay me entire amount and if anything goes wrong you use letter of credit to satisfy the claims
6
Q
Disadvantage
A
Don’t have third party investigating for you like in a bond
