The Freely Negotiable Letter of Credit serves as a crucial trade finance instrument in international commerce, particularly relevant under Indian jurisdiction where it must comply with RBI guidelines and FEMA regulations. This document type is commonly used when parties seek maximum flexibility in document negotiation while maintaining the security of bank-guaranteed payment. It contains detailed specifications about the trade transaction, including payment terms, document requirements, and shipping conditions. The freely negotiable nature distinguishes it from restricted Letters of Credit, allowing the beneficiary to negotiate the documents at any bank worldwide, thus providing greater flexibility in international trade transactions. This instrument is particularly valuable in complex cross-border transactions where parties require both payment security and operational flexibility.
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1. Letter Reference Number: Unique identification number of the Letter of Credit
2. Date of Issuance: The date when the Letter of Credit is issued
3. Type of Credit: Specification that this is a Freely Negotiable Letter of Credit
4. Applicant Details: Full name and address of the party requesting the Letter of Credit (typically the buyer)
5. Beneficiary Details: Full name and address of the party in whose favor the Letter of Credit is issued (typically the seller)
6. Issuing Bank Details: Name and address of the bank issuing the Letter of Credit
7. Amount and Currency: The credit amount and currency, stated in both figures and words
8. Expiry Date and Place: The date and place where the credit expires
9. Available With/By: Specifies that the credit is freely negotiable with any bank
10. Partial Shipments/Transhipment: Whether partial shipments or transhipment is allowed or prohibited
11. Port of Loading/Discharge: Specification of shipping details and locations
12. Latest Date of Shipment: Final date by which shipment must be made
13. Goods Description: Detailed description of the goods being traded
14. Required Documents: List of all documents required for negotiation
15. Special Conditions: Any additional terms or conditions specific to this credit
16. Charges: Specification of which party bears which bank charges
1. Advising Bank Details: Details of the advising bank if specified, used when the LC is advised through a specific bank
2. Confirmation Instructions: Used when confirmation is requested from another bank
3. Reimbursement Instructions: Include when specific reimbursement arrangements are required between banks
4. Insurance Requirements: Detailed insurance requirements when applicable to the transaction
5. Additional Conditions for Negotiation: Any special conditions or restrictions on negotiation
6. Transfer Conditions: Include when the credit is transferable, specifying the conditions for transfer
1. Schedule A - Document Requirements: Detailed list of required documents and their specifications
2. Schedule B - Goods Specification: Detailed technical specifications of the goods when required
3. Schedule C - Price Schedule: Breakdown of prices if multiple items or shipments are involved
4. Appendix 1 - UCP 600 Reference: Specific UCP 600 articles applicable to this credit
5. Appendix 2 - Standard Banking Forms: Forms required for negotiation or presentation
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Retail
Commodities Trading
Agriculture
Textile Industry
Electronics and Technology
Automotive
Oil and Gas
Mining
Construction
Pharmaceutical
Relevant Teams
Trade Finance
International Banking
Corporate Banking
Risk Management
Compliance
Treasury
Finance
Legal
Operations
International Sales
Procurement
Supply Chain
Documentary Credits
Global Transaction Services
Relevant Roles
Trade Finance Manager
International Business Development Manager
Import/Export Coordinator
Letter of Credit Specialist
Trade Operations Officer
Relationship Manager - Corporate Banking
Credit Risk Officer
Compliance Officer
Treasury Manager
Chief Financial Officer
Finance Director
Banking Operations Manager
Trade Documentation Specialist
International Sales Manager
Procurement Manager
Supply Chain Manager
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