The Irrevocable Letter of Credit is a fundamental instrument in international trade finance, providing security and payment assurance to parties involved in cross-border transactions. This document is particularly crucial when parties are operating under different legal systems and require a reliable payment mechanism. Under Dutch law, the document incorporates both local regulatory requirements and international banking standards, particularly the UCP 600 rules. It is commonly used when sellers require payment security before shipping goods, or when buyers need to demonstrate their creditworthiness and commitment to payment. The document details the conditions for payment, required documentation, shipping terms, and validity period, while ensuring compliance with Dutch financial regulations and EU directives. It represents an irrevocable commitment by the issuing bank, meaning it cannot be cancelled or amended without the agreement of all parties involved.
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1. Issuing Bank Details: Complete name and address of the issuing bank
2. Letter of Credit Number: Unique reference number assigned by the issuing bank
3. Date of Issue: Date when the Letter of Credit is issued
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. Currency and Amount: Currency denomination and the maximum amount available under the Letter of Credit
7. Expiry Date and Place: The expiration date and location where documents must be presented
8. Available With/By: Specification of how the credit is available (by sight, deferred payment, acceptance, or negotiation)
9. Required Documents: Detailed list of documents that must be presented for payment
10. Shipment Terms: Latest shipment date and any partial shipment or transshipment conditions
11. Description of Goods/Services: Clear description of the underlying goods or services
12. Payment Terms: Specific conditions and timing of payment
13. Bank Charges: Allocation of banking charges between parties
1. Transfer Conditions: Include when the Letter of Credit needs to be transferable to a second beneficiary
2. Back-to-Back Provisions: Include when the Letter of Credit will be used as security for issuing another Letter of Credit
3. Red Clause: Include when advance payment to the beneficiary is permitted
4. Green Clause: Include when storage of goods is involved with advance payment
5. Revolving Credit Terms: Include when the Letter of Credit is meant to be automatically renewed
6. Confirmation Instructions: Include when confirmation by another bank is required
7. Special Conditions: Include when there are additional requirements specific to the transaction
8. Force Majeure Provisions: Include when specific force majeure conditions need to be addressed
1. Document Presentation Schedule: Detailed timeline and procedure for document presentation
2. Commercial Invoice Template: Standard format for the commercial invoice to be presented
3. Transport Document Requirements: Specific requirements for bills of lading or other transport documents
4. Insurance Document Requirements: Detailed requirements for insurance certificates or policies
5. Amendment Form: Standard form for requesting amendments to the Letter of Credit
6. Underlying Commercial Contract Reference: Key details from the underlying sales or service contract
7. Bank Authorization Forms: Standard forms for bank processing and authorization
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Financial Services
Manufacturing
Import/Export
Commodities Trading
Retail
Agriculture
Energy
Construction
Shipping and Logistics
Technology and Electronics
Textiles
Automotive
Relevant Teams
Trade Finance
International Banking
Credit Operations
Treasury
Procurement
Supply Chain
Risk Management
Compliance
Legal
Documentary Credits
Trade Operations
Finance
International Sales
Relevant Roles
Trade Finance Manager
International Trade Specialist
Credit Manager
Treasury Manager
Finance Director
Import/Export Manager
Procurement Manager
Supply Chain Manager
Commercial Banking Officer
Documentary Credits Specialist
Trade Operations Manager
Risk Manager
Compliance Officer
Chief Financial Officer
International Sales Manager
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