The Trade Finance Letter of Credit is a fundamental instrument in international trade, particularly crucial in the Saudi Arabian context where transactions must comply with both Islamic banking principles and international standards. This document is typically used when a Saudi-based importer needs to provide payment security to an overseas exporter, or vice versa. The LC serves as a bank's irrevocable commitment to pay, subject to document compliance, and is governed by Saudi Arabian law, SAMA regulations, and UCP 600 rules. It includes detailed specifications of the trade transaction, required documents, payment terms, and shipping conditions, while ensuring adherence to Sharia principles that prohibit interest-based transactions and excessive uncertainty. The document is essential for businesses engaged in international trade who seek to minimize risks while maintaining compliance with local and international banking practices.
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1. Letter of Credit Number and Date: Unique identification number and issuance date of the LC
2. Issuing Bank Details: Complete name, address, and SWIFT code of the issuing bank
3. Applicant Details: Full name, address, and contact information of the buyer/importer
4. Beneficiary Details: Full name, address, and contact information of the seller/exporter
5. Currency and Amount: Currency denomination and amount of the LC in both figures and words
6. Expiry Date and Place: Final date and location for presentation of documents
7. Form of Credit: Specification that this is an irrevocable letter of credit
8. Available With/By: Name of nominated bank and manner of availability (sight, deferred payment, acceptance, or negotiation)
9. Required Documents: Detailed list of all required shipping and commercial documents
10. Shipment Terms: Latest shipment date, partial shipments, transhipment permissions, and Incoterms
11. Goods Description: Detailed description of goods, quantity, unit price, and total amount
12. Presentation Period: Time period within which documents must be presented after shipment
13. Sharia Compliance Statement: Declaration of compliance with Islamic banking principles
1. Advising Bank Details: Details of the advising bank when LC is advised through a specific bank
2. Confirming Bank Details: Details of the confirming bank when LC is confirmed
3. Reimbursing Bank Instructions: Include when reimbursement is through a third bank
4. Special Conditions: Any additional terms or conditions specific to the transaction
5. Insurance Requirements: Detailed insurance requirements if not covered by basic shipping documents
6. Pre-shipment Inspection: Requirements for pre-shipment inspection if required
7. Transfer Conditions: Include when LC is transferable
8. Back-to-Back Provisions: Include when LC allows for back-to-back arrangements
1. Document Checklist: Detailed checklist of all required documents with specific requirements for each
2. Goods Specification: Detailed technical specifications of goods when too lengthy for main LC text
3. Price Schedule: Detailed breakdown of prices when multiple items or complex pricing is involved
4. Shipping Schedule: When partial shipments are allowed with specific scheduling requirements
5. Bank Charges Schedule: Detailed breakdown of various bank charges and their allocation between parties
6. Required Format of Documents: Standard formats for commercial documents when specific formats are required
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Logistics and Transportation
Insurance
Agriculture
Oil and Gas
Construction Materials
Retail
Wholesale
Commodities Trading
Industrial Equipment
Consumer Goods
Relevant Teams
Trade Finance
International Banking
Legal
Compliance
Risk Management
Treasury
Commercial Operations
Supply Chain
Procurement
Finance
Credit Administration
Islamic Banking
Documentary Credits
Trade Operations
Relevant Roles
Trade Finance Manager
International Banking Officer
Import/Export Manager
Documentary Credits Specialist
Treasury Manager
Chief Financial Officer
Finance Director
Banking Relationship Manager
Trade Operations Officer
Compliance Officer
Legal Counsel
Risk Manager
Credit Analyst
Supply Chain Manager
Procurement Manager
Shipping Manager
Commercial Director
Islamic Banking Specialist
Documentary Collections Officer
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