The Divisible Letter of Credit is a crucial financial instrument used in international trade transactions where flexibility in credit utilization is required. This document type is particularly relevant when dealing with multiple shipments, various suppliers, or staged deliveries under a single credit facility. Under Canadian jurisdiction, it combines domestic banking regulations with international standards, particularly UCP 600, to provide a secure and reliable payment mechanism. The document details the terms under which the credit can be divided, utilized, and transferred, specifying the roles and responsibilities of all parties involved. It's commonly used in large-scale international trade transactions where the beneficiary needs the ability to partially draw down the credit amount or transfer portions to sub-suppliers.
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1. Letter Reference Number: Unique identification number for the Letter of Credit
2. Date of Issue: Date when the Letter of Credit is issued
3. Type of Credit: Specification that this is a Divisible Letter of Credit
4. Issuing Bank Details: Complete name and address of the issuing bank
5. Applicant Details: Full name and address of the party requesting the Letter of Credit
6. Beneficiary Details: Full name and address of the party in whose favor the Letter of Credit is issued
7. Currency and Amount: Specified currency and total amount of the Letter of Credit
8. Division Structure: Details of how the credit amount can be divided and utilized
9. Expiry Date: Date and place of expiry of the Letter of Credit
10. Presentation Terms: Specified period and location for document presentation
11. Required Documents: List of documents required for each drawing under the credit
12. Payment Terms: Conditions and timing of payment upon document presentation
13. Transferability: Terms and conditions regarding transfer of the Letter of Credit
14. Governing Law: Specification of Canadian law as governing law
1. Advising Bank: Details of the advising bank when Letter of Credit is advised through another bank
2. Confirmation Instructions: Used when confirmation from another bank is required
3. Partial Shipments: Include when specifying whether partial shipments are allowed
4. Transhipment: Include when specifying whether transhipment is permitted
5. Insurance Coverage: Include when specific insurance requirements need to be detailed
6. Special Conditions: Any additional terms or conditions specific to the transaction
7. Back-to-Back Provisions: Include when the Letter of Credit can be used as backing for another Letter of Credit
8. Green Clause: Include when advance payment provisions are required
1. Schedule A - Document Requirements: Detailed list and format of required documents for drawing under the credit
2. Schedule B - Division Schedule: Detailed breakdown of how the credit amount can be divided and utilized
3. Schedule C - Shipping Terms: Specific shipping requirements and conditions if applicable
4. Appendix 1 - Form of Draw Request: Standard format for beneficiary's drawing request
5. Appendix 2 - Form of Transfer Request: Standard format for transfer request if transferable
6. Appendix 3 - Specimen Signatures: Authorized signatures for relevant parties
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Commodities Trading
Retail
Agriculture
Energy
Mining
Construction
Shipping and Logistics
Relevant Teams
Trade Finance
International Banking
Treasury
Legal
Compliance
Risk Management
Operations
Supply Chain
Finance
Credit Administration
Documentary Credits
International Operations
Relevant Roles
Trade Finance Manager
International Banking Officer
Credit Manager
Treasury Manager
Financial Controller
Import/Export Manager
Trade Operations Manager
Documentary Credits Specialist
Compliance Officer
Risk Manager
Banking Relationship Manager
Supply Chain Manager
Chief Financial Officer
International Trade Specialist
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