The Documentary Letter of Credit is a fundamental instrument in international trade finance, particularly crucial in the Philippine context where cross-border transactions require secure payment mechanisms. It is typically used when parties need a reliable payment method that provides security to both the seller and buyer in international transactions. The document outlines the conditions for payment, typically including specific requirements for shipping documents, commercial invoices, and other trade-related documentation. Operating under Philippine jurisdiction and regulated by the Bangko Sentral ng Pilipinas (BSP), while following international UCP 600 guidelines, this instrument helps mitigate risks in international trade by providing a bank-guaranteed payment promise. It's especially valuable when parties are in different countries or are new to trading with each other, offering a structured framework for safe and secure international commerce.
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1. Letter Reference and Date: Reference number of the LC and issuance date
2. Applicant Details: Complete name and address of the party requesting the LC (buyer/importer)
3. Beneficiary Details: Complete name and address of the party in whose favor the LC is issued (seller/exporter)
4. Issuing Bank Details: Name and address of the bank issuing the LC
5. Advising Bank Details: Name and address of the bank notifying the beneficiary
6. Credit Amount and Currency: Specified amount and currency of the LC
7. Form of Credit: Whether irrevocable or irrevocable and confirmed
8. Expiry Date and Place: Validity period and location where the LC expires
9. Documentary Requirements: List of required documents (commercial invoice, transport documents, etc.)
10. Shipment Terms: Details of shipment including latest shipment date and partial shipments
11. Payment Terms: Conditions and timing of payment
12. Special Conditions: Any additional terms or conditions specific to this LC
1. Transferability Clause: Include when the LC needs to be transferable to another beneficiary
2. Back-to-Back Provisions: Include when allowing for back-to-back LC arrangements
3. Red Clause Provisions: Include when advance payment facilities are required
4. Green Clause Provisions: Include when storage facilities and advance payment are needed
5. Revolving Credit Terms: Include when the LC is to be automatically renewed
6. Standby Provisions: Include when the LC serves as a standby guarantee
1. Schedule A - Description of Goods: Detailed specification of goods being traded
2. Schedule B - Price Schedule: Breakdown of prices and payment terms
3. Schedule C - Required Documents Checklist: Comprehensive list of required documents with specific requirements
4. Schedule D - Shipping Terms: Detailed shipping instructions and requirements
5. Appendix 1 - Bank Forms: Standard forms required by the issuing bank
6. Appendix 2 - UCP 600 References: Relevant articles from UCP 600 applicable to this LC
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Retail
Agriculture
Mining
Textiles
Electronics
Automotive
Consumer Goods
Commodities Trading
Shipping and Logistics
Insurance
Relevant Teams
Finance
International Trade
Treasury
Legal
Compliance
Risk Management
Supply Chain
Procurement
Sales
Trade Operations
Documentary Credits
International Business Development
Relevant Roles
Trade Finance Manager
Import/Export Manager
Chief Financial Officer
Treasury Manager
International Business Development Manager
Procurement Manager
Credit Analyst
Documentary Credits Specialist
Trade Operations Manager
Compliance Officer
Banking Relationship Manager
Supply Chain Manager
International Sales Manager
Finance Director
Risk Manager
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