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Operative Letter Of Credit for United Arab Emirates

Operative Letter Of Credit Template for United Arab Emirates

A legally binding financial instrument issued by a bank in the United Arab Emirates, governed by UAE Federal Laws and international banking practices (UCP 600). This document represents a bank's irrevocable commitment to pay the beneficiary a specified amount upon presentation of compliant documents. It provides security in international trade transactions by acting as an independent undertaking from the bank, subject to UAE Central Bank regulations and commercial law framework, while incorporating international standard banking practices.

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Operative Letter Of Credit

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What is a Operative Letter Of Credit?

The Operative Letter of Credit serves as a fundamental instrument in international trade finance within the UAE's banking system. It provides a secure method of payment in cross-border transactions where the issuing bank commits to pay the seller upon presentation of specified documents. The document must comply with UAE Federal Law No. 18 of 1993 (Commercial Transactions Law), UAE Central Bank regulations, and international UCP 600 rules. An Operative Letter of Credit is particularly crucial in the UAE's trade-focused economy, offering protection to both importers and exporters by ensuring payment is made only when conditions are met and required documents are presented. The document typically includes detailed terms regarding payment conditions, required documentation, shipment specifications, and compliance requirements, while potentially incorporating Islamic banking principles when required under UAE law.

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

1. Bank Letterhead and Reference Number: Issuing bank's official letterhead, L/C number, and date of issuance

2. Type of Credit: Clear indication that this is an irrevocable letter of credit

3. Applicant Details: Full name and address of the party requesting the L/C (buyer/importer)

4. Beneficiary Details: Full name and address of the party in whose favor the L/C is issued (seller/exporter)

5. Currency and Amount: The currency and amount of the L/C, both in figures and words

6. Expiry Date and Place: Clear statement of when and where the L/C expires

7. Available With/By: Specification of how the credit is available (payment, acceptance, negotiation) and with which bank

8. Documents Required: Detailed list of all required documents for presentation

9. Shipment Terms: Details of goods, shipping method, port of loading/discharge, and latest shipment date

10. Payment Terms: Specific conditions and timing of payment

11. Special Conditions: Any specific requirements or conditions that must be met

12. UCP Declaration: Statement that the L/C is subject to UCP 600

13. Authentication: Authorized signatures and bank stamps

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

1. Transferability Clause: Include when the L/C needs to be transferable to a second beneficiary

2. Confirmation Instructions: Include when confirmation from another bank is required

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

4. Green Clause: Include when storage-related advance payment is permitted

5. Revolving Credit Terms: Include for automatically renewing L/Cs

6. Back-to-Back Provisions: Include when the L/C will be used to support another L/C

7. Islamic Banking Compliance: Include when the L/C needs to be Sharia-compliant

8. Standby Provisions: Include when the L/C serves as a standby instrument

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

1. Schedule A - Commercial Invoice Requirements: Detailed specifications for the format and content of commercial invoices

2. Schedule B - Transport Document Requirements: Specific requirements for bills of lading or other transport documents

3. Schedule C - Goods Specification: Detailed description of goods, including technical specifications

4. Schedule D - Insurance Requirements: Specific requirements for insurance coverage and documentation

5. Appendix 1 - Required Document Formats: Sample formats for required documents

6. Appendix 2 - Bank's Standard Charges: Schedule of applicable bank charges and fees

7. Appendix 3 - Authorized Signatories: List of authorized signatories and specimen signatures

Authors

Alex Denne

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

Publisher

Genie AI

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

Logistics & Supply Chain

Maritime Transport

Agriculture

Wholesale Distribution

Relevant Teams

Legal

Finance

Treasury

Trade Operations

Compliance

Risk Management

Procurement

Supply Chain

Commercial Operations

Banking Operations

International Trade

Documentation

Relevant Roles

Trade Finance Manager

Import/Export Manager

Treasury Manager

Financial Controller

Chief Financial Officer

Banking Operations Manager

Documentary Credits Specialist

Trade Operations Officer

Compliance Officer

Legal Counsel

Risk Manager

Supply Chain Manager

Procurement Manager

Commercial Director

Banking Relationship Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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