The Business Letter of Credit is a fundamental trade finance instrument used extensively in South African and international commerce. It provides a secure payment mechanism where a bank guarantees payment to a seller on behalf of a buyer, subject to the presentation of specified documents. This document type is particularly relevant in South Africa's context, where international trade plays a vital role in the economy and businesses require secure payment methods for cross-border transactions. The Letter of Credit details the conditions for payment, document requirements, and timeframes, while complying with both South African banking regulations and international standards like UCP 600. It's commonly used when parties seek to minimize commercial risks in significant transactions, especially in international trade where parties may not have established business relationships.
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1. Bank Letterhead and Reference: Issuing bank's official letterhead, LC reference number, and date
2. Beneficiary Details: Full name and address of the party receiving the Letter of Credit
3. Applicant Details: Full name and address of the party requesting the Letter of Credit
4. Credit Amount and Currency: Specific amount and currency of the Letter of Credit
5. Form of Credit: Whether the LC is irrevocable, confirmed, or transferable
6. Expiry Date and Place: Clear statement of when and where the LC expires
7. Document Requirements: Detailed list of required documents for presentation
8. Goods/Services Description: Clear description of the underlying transaction
9. Shipment Terms: Details of shipment, including latest shipment date and destination
10. Payment Terms: Conditions and timing of payment
11. Governing Law Statement: Specification of South African law as governing law
12. UCP 600 Reference: Statement of adherence to UCP 600 rules
13. Authorization: Bank officer signatures and authorization stamps
1. Confirmation Instructions: Used when a confirming bank is required to add its confirmation
2. Transferability Conditions: Include when the LC is transferable, specifying conditions
3. Revolving Credit Terms: Include for revolving LCs, specifying reinstatement conditions
4. Red Clause Provisions: Used when advance payment provisions are included
5. Back-to-Back Arrangements: Include when the LC is part of a back-to-back arrangement
6. Standby Provisions: Include for Standby Letters of Credit with specific trigger conditions
1. Document Checklist: Detailed checklist of all required documents and their specifications
2. Commercial Invoice Template: Prescribed format for commercial invoice presentation
3. Transport Document Requirements: Specific requirements for bills of lading or airway bills
4. Insurance Document Requirements: Details of required insurance coverage and documentation
5. Fee Schedule: Breakdown of all applicable bank charges and fees
6. Amendment Form: Standard form for requesting amendments to the LC
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Mining and Resources
Agriculture and Agribusiness
Retail
Wholesale
Import/Export
Logistics and Transportation
Commodities Trading
Construction
Technology and Electronics
Relevant Teams
Trade Finance
International Banking
Treasury
Finance
Legal
Compliance
Risk Management
Commercial Banking
Operations
Documentary Credits
International Trade
Supply Chain
Relevant Roles
Trade Finance Manager
International Business Manager
Chief Financial Officer
Financial Controller
Import/Export Manager
Treasury Manager
Banking Relationship Manager
Credit Manager
Trade Operations Officer
Documentary Credits Specialist
Commercial Banking Officer
Risk Management Officer
Compliance Officer
Finance Director
Supply Chain Manager
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