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Irrevocable Letter Of Credit for Saudi Arabia

Irrevocable Letter Of Credit Template for Saudi Arabia

A comprehensive banking instrument governed by Saudi Arabian law and Sharia principles, structured in accordance with the Uniform Customs and Practice for Documentary Credits (UCP 600). This document represents an irrevocable undertaking by a bank to pay a specified sum to a beneficiary upon presentation of compliant documents. It incorporates specific Saudi Arabian regulatory requirements, including SAMA guidelines and Islamic banking principles, while maintaining international banking standards. The document provides security for international trade transactions by guaranteeing payment subject to the presentation of specified documents and compliance with stated terms and conditions.

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Irrevocable Letter Of Credit

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What is a Irrevocable Letter Of Credit?

The Irrevocable Letter of Credit is a fundamental instrument in international trade finance, particularly crucial in the Saudi Arabian market where it bridges the gap between Islamic banking principles and global commerce. This document is typically used when conducting international trade transactions where parties seek secure payment methods and need to comply with both Sharia law and international banking practices. It provides a binding commitment from a bank to pay a specified amount to a beneficiary, usually a seller/exporter, upon presentation of compliant documents. The document must adhere to Saudi Arabian Monetary Authority (SAMA) regulations, Islamic banking principles, and international UCP 600 guidelines. It's particularly relevant in situations where parties need a secure, bank-guaranteed payment method that provides protection for both buyer and seller in international transactions.

What sections should be included in a Irrevocable Letter Of Credit?

1. Letter of Credit Number: Unique identification number of the LC

2. Date of Issue: The date when the LC is issued

3. Issuing Bank Details: Complete name and address of the issuing bank

4. Applicant Details: Full name, address and contact details of the party requesting the LC

5. Beneficiary Details: Full name, address and contact details of the party in whose favor the LC is issued

6. Currency and Amount: The currency and amount of the LC in both figures and words

7. Expiry Date: The date and place of expiry of the LC

8. Documentary Requirements: Detailed list of documents required for presentation

9. Payment Terms: Specific conditions and timing of payment

10. Shipment Terms: Details of shipment including latest shipment date and partial shipments if applicable

11. Governing Law and Jurisdiction: Specification of Saudi law and UCP 600 as governing rules

What sections are optional to include in a Irrevocable Letter Of Credit?

1. Advising Bank Details: Details of the intermediary bank, used when there's a bank in the beneficiary's country involved

2. Transferability Clause: Include when the LC needs to be transferable to another beneficiary

3. Confirmation Instructions: Used when confirmation by another bank is required

4. Red Clause: Include when advance payment to the beneficiary is permitted

5. Green Clause: Include when storage of goods at destination is required before document presentation

6. Revolving Terms: Include when the LC is revolving in value or time

7. Tolerance Clause: Specify when variation in quantity or amount is acceptable

What schedules should be included in a Irrevocable Letter Of Credit?

1. Schedule A - Document Checklist: Detailed checklist of all required documents and their specifications

2. Schedule B - Special Payment Conditions: Any special conditions or requirements for payment

3. Schedule C - Goods Description: Detailed description of the goods or services covered by the LC

4. Appendix 1 - UCP 600 Incorporation: Specific UCP 600 articles being incorporated or modified

5. Appendix 2 - Sharia Compliance Declaration: Declaration and certification of Sharia compliance

6. Appendix 3 - Authentication Details: SWIFT or other authentication details and procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions











































Clauses






























Relevant Industries

Banking & Financial Services

International Trade

Import/Export

Manufacturing

Retail

Commodities Trading

Oil & Gas

Construction

Agriculture

Logistics & Transportation

Maritime Shipping

Industrial Equipment

Textiles & Garments

Technology & Electronics

Relevant Teams

Legal

Finance

International Trade

Treasury

Risk Management

Compliance

Trade Operations

Corporate Banking

Documentary Credits

Supply Chain

Commercial Operations

Relevant Roles

Trade Finance Manager

International Banking Officer

Corporate Banking Manager

Trade Operations Specialist

Documentary Credits Manager

Compliance Officer

Import/Export Manager

Treasury Manager

Risk Management Officer

Legal Counsel

Finance Director

Chief Financial Officer

Banking Relationship Manager

Commercial Director

Supply Chain Manager

Industries








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