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The Synthetic Letter of Credit is designed to meet the evolving needs of modern international trade and financial transactions within the Canadian legal framework. This instrument emerged as a response to complex trading relationships where traditional letters of credit may be too rigid or costly. The document incorporates elements of both standby and commercial letters of credit, providing a hybrid solution that offers greater flexibility while maintaining the security of bank-backed obligations. It is particularly useful in situations involving multiple parties, complex payment structures, or when traditional trade finance instruments don't fully address the parties' needs. The document must comply with Canadian federal banking regulations and commonly incorporates international banking practices such as ISP98 or UCP 600.

1. Issuing Bank Details: Complete identification and contact information of the bank issuing the synthetic LC

2. Beneficiary Details: Complete identification and contact information of the party in whose favor the synthetic LC is issued

3. Applicant Details: Complete identification and contact information of the party requesting the synthetic LC

4. Credit Amount and Currency: Specification of the maximum amount available under the synthetic LC and the currency of payment

5. Expiry Date: Clear statement of when the synthetic LC expires

6. Drawing Terms and Conditions: Detailed conditions that must be met for the beneficiary to draw under the synthetic LC

7. Required Documents: Specific list of documents that must be presented to make a complying presentation

8. Presentation Location: Where and how documents must be presented

9. Governing Law and Jurisdiction: Specification of Canadian law as governing law and jurisdiction for disputes

10. Reference to Applicable Rules: Incorporation of relevant rules (e.g., ISP98 or UCP 600)