The Banker's Usance Letter of Credit is a crucial financial instrument in international trade transactions under German law, providing security and payment assurance to both buyers and sellers. It is typically used when the buyer requires extended payment terms while ensuring the seller receives a bank-backed payment guarantee. The document outlines the specific terms of the credit, including the usance period (usually 30, 60, or 90 days), document requirements, and payment conditions. It combines German banking regulations, particularly the Handelsgesetzbuch (HGB) and Kreditwesengesetz (KWG), with international trade practices and UCP 600 rules. This instrument is particularly valuable in cross-border transactions where parties seek to balance payment security with flexible financing terms.
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1. Letter Reference and Date: Unique LC reference number and issuance date
2. Parties Identification: Full details of the issuing bank, beneficiary, and applicant
3. Credit Amount and Currency: Specification of the LC amount and currency of payment
4. Usance Period: Clear statement of the credit tenor (typically 30, 60, or 90 days from bill of lading date)
5. Documents Required: Comprehensive list of required documents for presentation
6. Shipment Terms: Details of shipment including latest shipment date and partial shipments allowance
7. Presentation Period: Timeframe within which documents must be presented
8. Payment Terms: Specific conditions and timing of payment after document presentation
9. Governing Law and UCP 600: Reference to German law and UCP 600 applicability
10. Bank Authorization: Official signatures and stamps of the issuing bank
1. Transferability Clause: Include when the LC needs to be transferable to a second beneficiary
2. Back-to-Back Arrangements: Include when the LC is part of a back-to-back LC structure
3. Special Instructions: Any unique requirements or conditions specific to the transaction
4. Revolving Terms: Include if the LC is revolving in value or time
5. Red Clause: Include if advance payment provisions are required
6. Green Clause: Include if warehouse storage provisions are needed
1. Document Checklist: Detailed checklist of required documents with specific format requirements
2. Standard Banking Forms: Ƶ for drafts, bills of exchange, or other required banking forms
3. Specimen Signatures: Authorized signatures for the issuing bank and any confirming banks
4. Fee Schedule: Breakdown of all applicable banking charges and fees
5. Amendment Format: Standard format for any future amendments to the LC
6. SWIFT Message Format: Standard format for SWIFT MT 700 series messages related to the LC
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Financial Services
Manufacturing
Commodities Trading
Import/Export
Shipping and Logistics
Agriculture
Textiles
Industrial Equipment
Raw Materials
Relevant Teams
Trade Finance
International Banking
Documentary Credits
Treasury Operations
Risk Management
Commercial Banking
Legal
Compliance
Finance Operations
Credit Administration
Relevant Roles
Trade Finance Manager
International Trade Specialist
Documentary Credits Officer
Import/Export Manager
Treasury Manager
Trade Operations Officer
Credit Risk Officer
Relationship Manager
Commercial Banking Officer
Letter of Credit Specialist
Chief Financial Officer
Finance Director
Trade Finance Analyst
Compliance Officer
Banking Operations Manager
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