A conventional documentary credit is issued to provide the seller with an undertaking of payment upon the seller's submission of documents in accordance with the terms and conditions of the credit after shipment has taken place.
A standby documentary credit, on the other hand, is an undertaking which is activated only if something goes wrong between the buyer and the seller and the expected payment does not take place. It therefore allows the seller to enforce a claim. Sample standby documentary credit wording can be downloaded from this site, however please note customer circumstances differ. There are many kinds of transactions which involve different kinds of third parties. The actual Standby LC wording to be issued would be in response to a customer request.