Payment against L/C is released by bank before buyer receives goods. Any precautions for ensuring that goods are delivered as per contract?

L/C is opened before shipment as per agreement between buyer and seller sometimes upto 80% of the value of goods, but paid 30, 60, 90, 120 days after shipment upon presentation of shipping document (bill of lading, commercial invoice, country of origin certificate) with the goods fully insured against damages during shipment and materials handling till point of delivery. Performance bond guarantee / retention money  upto 10% of contract value.Normally, L/C terms should be such that payment is made after delivery

Dont deal with such demanding supplier unless there is a performance guarantee provided. 

For LC bank is consignee so he guarantee the goods from supplier bank till receive original BL and the goods in port of discharge , to be in safe side make LC 90 days to avoid any risks

In the first instance, I would not be dealing with a company that demands payment before you have had the opportunity to inspect the shipment.

Whay you are looking for forms part of the initial upfront vendor selection process. "Caviat Emptor" , means simply, the buyer is responsbile to initiate those action required to safeguard their interests. If you feel that there may be potential issues with the supplier process , then they should be addressed up front.

I requested LCL payments from our finance department, when I had proof the goods were in a bonded warehouse with all documents our shipping agent/logisits provider needed for the goods to be sent...

As I recall we only used LCL's for shippments of goods from Asia... do not recall dealing with this type of payment in Europe

Seller shall provide the Performance Bank Guarantee against the purchased material and this should be included in the Purchase Order Contract. The supplier/seller shall provide an Unconditional Bank Guarantee issued by any reputed bank.  This is the best security that will bound seller based on which the buyer or bank can release the contracted payment against LC prior the material is delivered.

If the buyer determine that the seller failed in any respect to perform according to the terms of contract and the seller is agreed; then the Guarantor shall pay back to buyer without any reservation the Guaranteed money.

This should really not happen but in case it does, only bank guarantee and/or penalties for case of non-delivery, predefined in a valid contract between two parties can help (sometimes vendors are honest and fair, that can also be helpful ;)).

On bank guarantees possibly applicable:

• Performance Guarantee (or Performance Bond) – these are bonds that act as collateral for any loss suffered by the buyer in case the performance of the seller is below par or nil.
• Advance Payment Guarantee – this is to ensure the safety of any advance payment made by the buyers to the seller. In case the seller is unable to deliver the service or the goods, then the buyer can get his money back.
• Comment added by jasmina malnar , Head of Marketing and Indirect Procurement - just now      
• Under assumption that you work with excellent reliable suppliers and you have a good working relationship / contract with your bank, this should not happen, and even if it does happen should not be an issue. Hope this helps.