The Freely Negotiable Letter of Credit is a crucial trade finance instrument used in international commerce under UAE jurisdiction. It serves as a secure payment method where the issuing bank commits to pay the beneficiary upon presentation of compliant documents, regardless of which bank handles the negotiation. This type of L/C offers maximum flexibility as it can be negotiated at any bank worldwide, making it particularly valuable for international traders operating through UAE banking channels. The document incorporates both UAE Federal Laws and international banking practices (UCP 600), potentially including Islamic banking principles where relevant. It typically contains detailed specifications about the underlying trade transaction, payment terms, required documents, and shipping conditions, providing security to both buyers and sellers in international trade.
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1. Letter Opening and Reference Details: Opening clause identifying the issuing bank and L/C reference number
2. Beneficiary Details: Full name and address of the beneficiary of the Letter of Credit
3. Applicant Details: Full name and address of the applicant requesting the Letter of Credit
4. Currency and Amount: Specification of the credit amount and currency
5. Form of Credit: Statement confirming this is a freely negotiable Letter of Credit
6. Expiry Details: Expiry date and place of the Letter of Credit
7. Shipment Terms: Latest shipment date and delivery terms
8. Payment Terms: Payment conditions, sight or usance, and negotiation terms
9. Required Documents: List of documents required for negotiation
10. Goods Description: Detailed description of the goods or services covered
11. Governing Law and UCP Declaration: Reference to UAE law and UCP 600 application
1. Partial Shipments/Transhipment: Include when specific shipping arrangements need to be permitted or prohibited
2. Transfer Terms: Include when the L/C needs to be transferable
3. Special Conditions: Include when there are additional requirements or conditions specific to the transaction
4. Islamic Banking Compliance: Include when the L/C needs to be Shariah-compliant
5. Red Clause Provisions: Include when advance payment provisions are required
6. Back-to-Back Provisions: Include when the L/C is part of a back-to-back arrangement
1. Commercial Invoice Template: Prescribed format for commercial invoice presentation
2. Transport Document Requirements: Detailed specifications for required transport documents
3. Insurance Document Requirements: Specifications for insurance documentation if required
4. Certificate of Origin Requirements: Format and requirements for origin certification
5. Inspection Certificate Requirements: Details of required inspection certificates and their format
6. Bank Details Schedule: Banking coordinates and swift codes for all relevant parties
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Manufacturing
Import/Export
Retail
Commodities Trading
Oil & Gas
Construction
Logistics & Transportation
Agriculture
Textile Industry
Electronics & Technology
Relevant Teams
Trade Finance
International Banking
Treasury
Commercial Banking
Risk Management
Legal
Compliance
Operations
Supply Chain
Procurement
Finance
Documentary Credits
Relevant Roles
Trade Finance Manager
International Trade Specialist
Letter of Credit Officer
Import/Export Manager
Treasury Manager
Finance Director
Commercial Banking Officer
Trade Operations Manager
Compliance Officer
Credit Risk Manager
Documentary Credits Specialist
Chief Financial Officer
Banking Relationship Manager
Supply Chain Manager
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