The banking letter of guarantee is considered as one of the pioneer credit banking services provided by the banks due to its importance to the companies, whereas, the letter of guarantee is a banking service provided by the bank to its customers to facilitate their transaction with governmental and private sector entities. Given the prevalence of this kind of transaction nowadays, hence, there is an urgent need to state the position of Omani legislation in comparison with other Arab legislations in order to identify shortcomings or deficiencies in the Omani legislation. The issue regarding these sorts of transaction consists in: 1- the knowledge of the legal provisions governing the letter of guarantee under the Omani law? 2- the legal qualification of the letter of guarantee? 3- the compatibility of the provisions of the letter of guarantee with the contractual provisions set out in the general rules? 4- what are the legal remedies to the problems arising between the parties of the letter of guarantee? What are the legal implications of the letter of guarantee under the Omani law? All of the above calls for research and investigation to demonstrate appropriate solutions to the problems that may arise out of the letter of guarantee transaction. Based on the above issues, this study aims to set out the legal provisions in order to reach the answers to the problems raised above in accordance with the Omani Trade Law promulgated by Royal Decree No. 55/1990.