The Unconditional Letter of Credit is a crucial financial instrument in international trade and commercial transactions, particularly under German law where it combines local banking regulations with international banking practices. This document is typically used when parties seek a secure, bank-guaranteed payment method that is independent of the underlying commercial contract. It represents a bank's irrevocable commitment to pay the beneficiary upon presentation of compliant documents (if any are required), without the possibility of the bank raising defenses or conditions from the underlying transaction. The document incorporates requirements from German banking laws, EU regulations, and international banking standards (UCP 600), making it particularly suitable for high-value international transactions where payment security is paramount. Its unconditional nature distinguishes it from standard documentary credits, offering enhanced security to the beneficiary while maintaining the formal requirements of German banking practice.
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1. Letter Reference Number: Unique identification number assigned by the issuing bank
2. Date of Issue: Date when the Letter of Credit is issued
3. Type of Credit: Specification that this is an Unconditional, Irrevocable Letter of Credit
4. Issuing Bank Details: Complete name, address, and SWIFT code 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: The currency and amount of the Letter of Credit in both figures and words
8. Expiry Date: Date and place of expiry of the Letter of Credit
9. Payment Terms: Specification of payment conditions and timing
10. Bank Undertaking: Clear statement of the bank's unconditional commitment to pay
11. Governing Law and Jurisdiction: Statement that the Letter of Credit is governed by German law
1. Advising Bank Details: Details of the bank advising the credit to the beneficiary, used when there's an intermediary bank
2. Transferability Clause: Section indicating whether the Letter of Credit is transferable, included when transferability is requested
3. Confirmation Instructions: Instructions regarding confirmation by another bank, included when confirmation is required
4. Partial Shipments/Drawings: Clause indicating whether partial shipments or drawings are allowed, included for trade-related credits
5. Special Conditions: Any additional terms or conditions specific to the transaction
6. Assignment of Proceeds: Section dealing with assignment rights, included when assignment of proceeds is permitted
1. Appendix A - Payment Instructions: Detailed banking information for payment processing
2. Appendix B - Required Documents: List of documents required for presentation, if any specific documents are needed
3. Schedule 1 - Transaction Details: Specific details of the underlying transaction or purpose of the Letter of Credit
4. Schedule 2 - Special Instructions: Any additional instructions or requirements for processing the Letter of Credit
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Wholesale Trade
Commodities Trading
Construction
Industrial Equipment
Energy and Resources
Agriculture
Automotive
Shipping and Logistics
Relevant Teams
Treasury
Trade Finance
International Banking
Legal
Compliance
Risk Management
Finance
Trade Operations
Commercial Operations
Supply Chain
Credit Administration
Documentary Credits
Relevant Roles
Trade Finance Manager
International Banking Officer
Credit Manager
Treasury Manager
Finance Director
Chief Financial Officer
Import/Export Manager
Trade Operations Manager
Documentary Credits Specialist
Banking Relationship Manager
Risk Management Officer
Compliance Officer
Legal Counsel
Commercial Director
Supply Chain Manager
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