The Acceptance Letter of Credit (LC) is a crucial financial instrument in international trade, particularly relevant under Philippine jurisdiction and banking regulations. This document is typically used when buyers require extended payment terms while ensuring sellers receive a secure payment commitment. The Acceptance LC differs from a sight LC as it involves the bank accepting time drafts that will be paid at maturity rather than immediate payment. The document must comply with both Philippine banking laws, particularly Republic Act No. 8791 (The General Banking Law of 2000) and BSP regulations, as well as international standards like UCP 600. It includes specific terms regarding the acceptance of drafts, maturity dates, document requirements, and payment conditions. This type of LC is particularly valuable in trade financing as it allows importers to obtain credit terms while providing exporters with a bankable instrument that can be discounted if immediate funds are needed.
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1. Letter Header: Issuing bank's letterhead, date, reference number, and contact details
2. Addressee Details: Beneficiary's complete name and address
3. LC Type and Number: Clear indication that this is an Acceptance LC and its unique reference number
4. Amount and Currency: The credit amount and currency specification
5. Draft Requirements: Specifications for the bill of exchange including tenor and drawee details
6. Document Requirements: List of required documents (commercial invoice, transport documents, etc.)
7. Goods Description: Brief but clear description of the merchandise or services
8. Shipment Terms: Latest shipment date, partial shipments, transhipment conditions
9. Expiry Details: Expiry date and place of the credit
10. Payment Terms: Specific acceptance and payment conditions, maturity date calculation
11. Applicable Rules: Reference to UCP 600 and other applicable rules
1. Special Instructions: Additional instructions or conditions specific to the transaction
2. Reimbursement Instructions: Include when involving a reimbursing bank
3. Transfer Conditions: Required when the credit is transferable
4. Green Clause: Include when advance payment is permitted against warehouse receipts
5. Red Clause: Include when advance payment is permitted before document presentation
6. Confirmation Instructions: Include when confirmation is requested from another bank
1. Schedule A - Document Checklist: Detailed checklist of required documents and their specifications
2. Schedule B - Technical Specifications: Detailed technical description of goods or services when applicable
3. Schedule C - Special Payment Terms: Detailed breakdown of payment terms and calculations if complex
4. Appendix 1 - Draft Format: Prescribed format for the bill of exchange
5. Appendix 2 - Document Formats: Sample formats for required documents
6. Appendix 3 - Bank Details: Complete banking details for all parties involved
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Retail
Wholesale
Agriculture
Mining
Textiles
Electronics
Automotive
Construction
Commodities Trading
Relevant Teams
Trade Finance
International Banking
Documentary Credits
Risk Management
Compliance
Treasury
Operations
Legal
Credit Administration
Trade Operations
Relevant Roles
Trade Finance Manager
International Banking Officer
Documentary Credits Specialist
Import/Export Manager
Treasury Manager
Credit Risk Officer
Compliance Officer
Banking Operations Manager
Trade Operations Specialist
Financial Controller
Chief Financial Officer
International Trade Specialist
Banking Relationship Manager
Letter of Credit Manager
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