1.1 For the purpose of this policy, a standby letter of credit (hereinafter referred to as "letter of credit") means any arrangement, however named or described, whereby a financial institution (the "Issuer"), acting at the request and on the instructions of a customer (the "Applicant"), or on its own behalf, is to make a payment to or to the order of the Crown, as the beneficiary, or is to accept and pay bills of exchange drawn by the Crown, or authorises another financial institution to effect such payment, or accept and pay such bills of exchange, or authorises another financial institution to negotiate, against written demand(s) for payment, provided that the terms and conditions of the letter of credit are complied with.
1.2 A bid support letter of credit is a letter of credit pursuant to which demand may be made if the proposed contractor refuses or fails to enter into a written contract in accordance with the terms and conditions of the bid or fails to provide the required contract security.
1.3 A contract support letter of credit is a letter of credit pursuant to which demand may be made if the contractor, having entered into a contract with the Crown, does not perform the contract in accordance with the terms and conditions of that contract.
1.4 The expression "member of the Canadian Payments Association" is defined in the Canadian Payments Association Act.
1.5 The expression "UCP" means the International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No 600.