An Installment Letter of Credit is commonly used in the UAE for complex international trade transactions where payments need to be made in phases. This document type is particularly relevant when dealing with large-value purchases, project implementations, or long-term supply contracts where both parties seek to manage cash flow effectively. The structure follows UAE banking regulations and international banking practices (UCP 600), providing security to both the buyer and seller while facilitating structured payments over time. It's especially useful in scenarios involving capital equipment, construction projects, or large-scale procurement where immediate full payment isn't practical or desired. The document specifies payment schedules, documentary requirements, and conditions for each installment, while ensuring compliance with UAE federal laws and Central Bank regulations.
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1. Letter Reference and Date: Unique reference number and date of issuance of the LC
2. Applicant Details: Full name, address, and contact information of the party requesting the LC
3. Beneficiary Details: Full name, address, and contact information of the party in whose favor the LC is issued
4. Credit Amount and Currency: Total value of the LC and currency denomination
5. Form of Credit: Specification that this is an installment letter of credit and whether it is irrevocable
6. Installment Payment Structure: Detailed breakdown of installment amounts, due dates, and payment conditions
7. Documents Required: List of documents that must be presented for each installment payment
8. Shipment Terms: Details of goods, shipment schedule, and delivery terms if applicable
9. Expiry Date and Place: Final validity date of the LC and location where documents must be presented
10. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant jurisdiction
1. Partial Shipments/Drawings: Include when partial shipments or drawings are permitted or prohibited
2. Transferability Clause: Include when the LC needs to be transferable to other beneficiaries
3. Islamic Banking Compliance: Include when the LC needs to comply with Sharia principles
4. Insurance Requirements: Include when specific insurance coverage is required for the underlying transaction
5. Force Majeure Provisions: Include when specific force majeure conditions need to be addressed
6. Amendment Procedures: Include when specific procedures for amendments need to be established
1. Schedule A - Payment Schedule: Detailed table of installment payments including dates, amounts, and conditions
2. Schedule B - Document Checklist: Comprehensive list of required documents for each installment
3. Schedule C - Shipping Schedule: If applicable, detailed timeline for shipments corresponding to installments
4. Appendix 1 - Standard Banking Forms: Required banking forms and formats for document presentation
5. Appendix 2 - Fee Schedule: Breakdown of all applicable banking fees and charges
6. Appendix 3 - Terms and Conditions: Standard terms and conditions applicable to the LC as per bank's policy
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Construction and Infrastructure
Oil and Gas
Heavy Equipment
Renewable Energy
Shipping and Logistics
Retail and Wholesale
Industrial Equipment
Technology and Telecommunications
Agricultural Products
Relevant Teams
Trade Finance
Treasury
Legal
Compliance
Risk Management
Procurement
Supply Chain
International Banking
Corporate Banking
Documentary Credits
Finance Operations
Commercial Operations
Relevant Roles
Trade Finance Manager
Chief Financial Officer
Finance Director
Treasury Manager
Import/Export Manager
Procurement Director
Supply Chain Manager
Corporate Banking Officer
Letter of Credit Specialist
International Trade Specialist
Compliance Officer
Legal Counsel
Risk Manager
Commercial Director
Project Finance Manager
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