The Domestic Letter of Credit is a crucial financial instrument used in Dutch domestic trade transactions where parties seek payment security through bank intermediation. This document type is particularly relevant when businesses within the Netherlands require a formal payment guarantee from a bank, distinguishing itself from international LCs by operating solely within Dutch jurisdiction and being primarily governed by Dutch law rather than international banking practices. The Domestic Letter of Credit includes specific provisions for document presentation, payment terms, and validity periods, all aligned with Dutch banking regulations and the Financial Supervision Act (Wft). It's commonly used in situations where the seller requires payment security from a creditworthy bank rather than relying solely on the buyer's promise to pay, while keeping the transaction within the Dutch domestic market context.
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1. Letter Header and Date: Bank's letterhead, reference number, and date of issuance
2. Beneficiary Details: Full name and address of the party in whose favor the LC is issued
3. Applicant Details: Full name and address of the party requesting the LC
4. Credit Amount and Currency: Specification of the maximum amount and currency of the LC
5. Validity Period: Clear statement of the LC's expiry date and last date for presentation of documents
6. Payment Terms: Conditions under which payment will be made, including required documents and timeline
7. Document Requirements: Detailed list of documents that must be presented for payment
8. Presentation Location: Where and how documents should be presented
9. Governing Law Statement: Explicit statement that Dutch law governs the LC
10. Bank's Authorization: Authorized signatures and bank's official stamp
1. Partial Shipments/Drawings: Include when multiple drawings or partial payments are permitted
2. Transfer Rights: Include when the LC needs to be transferable to another beneficiary
3. Special Conditions: Include when there are specific conditions or requirements unique to this LC
4. Anti-Money Laundering Declaration: Include when enhanced due diligence is required under Wwft
5. Confirmation Instructions: Include when another bank's confirmation is requested
6. Amendment Procedures: Include when specific amendment procedures need to be outlined
1. Document Checklist: Detailed checklist of required documents with specific formatting requirements
2. Fee Schedule: Breakdown of all applicable fees and charges
3. Payment Schedule: If installment payments are involved, detailed schedule of payment dates and amounts
4. Specimen Signatures: Authorized signatures for document verification
5. Bank's Standard Terms and Conditions: General terms and conditions applicable to domestic LCs
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Manufacturing
Wholesale Trade
Retail
Construction
Agriculture
Energy
Logistics and Transportation
Industrial Production
Real Estate
Relevant Teams
Trade Finance
Legal
Compliance
Risk Management
Treasury
Commercial Banking
Operations
Credit Administration
Documentary Credits
Client Relations
Relevant Roles
Trade Finance Manager
Credit Manager
Financial Controller
Treasury Manager
Commercial Banking Officer
Risk Management Officer
Compliance Officer
Documentary Credits Specialist
Account Relationship Manager
Chief Financial Officer
Banking Operations Manager
Legal Counsel
Credit Risk Analyst
Trade Operations Manager
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