A Business Letter of Credit is a fundamental trade finance instrument used in international commerce, particularly relevant under UAE law where it combines local regulations with international banking practices. It serves as a secure payment mechanism where a bank guarantees payment to a seller on behalf of a buyer, subject to the presentation of compliant documents. The document is governed by UAE federal laws, particularly the Commercial Code and Central Bank regulations, while also adhering to international standards such as UCP 600. This instrument is typically used when parties seek to minimize trading risks, especially in cross-border transactions, providing security to sellers while offering buyers credit arrangements. The Letter of Credit contains specific terms, conditions, and documentary requirements that must be met before payment is released.
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1. Bank Reference Number: Unique identification number assigned by the issuing bank
2. Date of Issuance: Date when the Letter of Credit is issued
3. Type of Credit: Specification of whether it's irrevocable, confirmed, transferable, etc.
4. Applicant Details: Full name, address, and contact information of the buyer/importer
5. Beneficiary Details: Full name, address, and contact information of the seller/exporter
6. Currency and Amount: Specification of the currency and the exact amount of the Letter of Credit
7. Expiry Date: Date and place of expiry of the Letter of Credit
8. Shipment Terms: Latest shipment date, partial shipments, transshipment permissions
9. Required Documents: List of documents required for presentation
10. Payment Terms: Specification of when and how payment will be made
11. Governing Law: Statement that the L/C is subject to UCP 600 and UAE law
1. Confirmation Instructions: Used when confirmation from another bank is required
2. Transfer Conditions: Include when the L/C is transferable
3. Back-to-Back Provisions: Used when allowing back-to-back L/C arrangements
4. Red Clause: Include when advance payment provisions are needed
5. Green Clause: Used when warehouse storage provisions are required
6. Revolving Terms: Include for revolving Letters of Credit
7. Tolerance Provisions: Used when allowing quantity/amount tolerances
1. Commercial Invoice Requirements: Detailed specifications for acceptable commercial invoices
2. Transport Document Requirements: Specific requirements for bills of lading or other transport documents
3. Insurance Document Requirements: Details of required insurance coverage and documentation
4. Product Specifications: Detailed description of goods, including quality, quantity, and packaging requirements
5. Special Instructions: Any additional requirements or special conditions
6. Bank Details: Complete banking information for all parties involved
7. Required Certifications: List of required certificates (origin, inspection, etc.) with specific requirements
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking & Financial Services
Manufacturing
Import/Export
Retail
Commodities Trading
Construction
Agriculture
Oil & Gas
Textiles
Electronics
Automotive
Relevant Teams
Finance
International Trade Operations
Treasury
Legal
Compliance
Risk Management
Procurement
Supply Chain
Trade Documentation
Banking Relations
Relevant Roles
Trade Finance Manager
Import/Export Manager
Finance Director
Treasury Manager
Chief Financial Officer
Trade Operations Officer
Banking Relationship Manager
Compliance Officer
Documentary Credits Specialist
International Trade Specialist
Supply Chain Manager
Procurement Manager
Legal Counsel
Risk Manager
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