The Operative Letter of Credit is a crucial financial instrument used in international trade transactions where parties seek secure payment mechanisms. It is particularly relevant when dealing with cross-border transactions involving Danish entities or when Danish law governance is preferred. The document is issued by a bank at the request of an importer (buyer) in favor of an exporter (seller), providing assurance of payment upon compliance with specified conditions. The Letter of Credit operates under Danish financial regulations and banking laws, while also adhering to international banking standards, particularly the UCP 600. This document type is essential when parties require a secure, bank-mediated payment method that protects both buyers' and sellers' interests in international trade transactions. It includes specific details about payment terms, required documentation, shipping conditions, and compliance requirements, making it a comprehensive instrument for managing international trade risks.
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Key Requirements PROMPT example:
Operative Letter Of Credit
I need an Operative Letter of Credit under Danish law for importing manufacturing equipment worth EUR 500,000 from a German supplier, with staged payments and requirement for technical inspection certificates, for delivery by March 2025.
1. Letter Header & Date: Bank's letterhead, reference number, and date of issuance
2. Beneficiary Details: Full name and address of the beneficiary (seller/exporter)
3. Applicant Details: Full name and address of the applicant (buyer/importer)
4. Credit Number: Unique letter of credit reference number
5. Currency and Amount: Specification of the credit amount and currency
6. Form of Credit: Specification that this is an irrevocable documentary credit
7. Expiry Details: Expiry date and place for document presentation
8. Available With: Specification of the nominated bank and manner of availability
9. Payment Terms: Terms of payment including sight, deferred payment, or acceptance
10. Required Documents: Detailed list of all required documents for presentation
11. Shipment Terms: Details of shipment including latest shipment date and partial shipments
12. Description of Goods: Precise description of the goods or services covered
13. Special Conditions: Any additional terms or conditions specific to this credit
14. Authorization: Bank's authorized signatures and authentication
1. Transferability Clause: Include when the credit needs to be transferable to another beneficiary
2. Revolving Terms: Include for credits that automatically renew under specified conditions
3. Red Clause: Include when advance payment provisions are required
4. Green Clause: Include when warehouse storage provisions are needed
5. Back-to-Back Provisions: Include when the credit supports a back-to-back arrangement
6. Confirmation Instructions: Include when confirmation by another bank is required
7. Reimbursement Instructions: Include when specific reimbursement arrangements are needed
1. Commercial Invoice Template: Standard format for the commercial invoice required under the credit
2. Shipping Document Requirements: Detailed specifications for transport documents
3. Technical Specifications: Detailed technical requirements for the goods
4. Price Schedule: Detailed breakdown of prices if multiple items or shipments are involved
5. Insurance Requirements: Specific insurance coverage requirements and terms
6. Inspection Certificate Requirements: Detailed requirements for inspection certificates if required
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Import/Export
Manufacturing
Retail
Commodities Trading
Shipping & Logistics
Agriculture
Energy
Construction
Heavy Industry
Relevant Teams
Trade Finance
International Banking
Legal & Compliance
Treasury
Risk Management
Commercial Banking
Documentary Credits
Trade Operations
Export Finance
Import Operations
Relevant Roles
Trade Finance Manager
International Trade Specialist
Documentary Credits Officer
Export Finance Manager
Import Operations Manager
Trade Operations Officer
Compliance Officer
Legal Counsel
Financial Controller
Treasury Manager
Banking Relationship Manager
Trade Documentation Specialist
Risk Manager
Commercial Banking Officer
Credit Analysis Manager
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