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Direct Letter Of Credit for South Africa

Direct Letter Of Credit Template for South Africa

A Direct Letter of Credit is a formal banking instrument issued under South African law and international banking practices (UCP 600), representing a bank's irrevocable commitment to pay the beneficiary upon presentation of compliant documents. This document serves as a secure payment mechanism in international trade, where the issuing bank directly undertakes to pay the beneficiary without the involvement of an intermediary confirming bank. The document must comply with South African banking regulations, foreign exchange controls, and international trade standards while providing clear terms for payment, document requirements, and transaction conditions.

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What is a Direct Letter Of Credit?

The Direct Letter of Credit is a fundamental financial instrument used in international trade transactions governed by South African law. This document is typically employed when a buyer needs to provide payment security to an overseas seller, and the seller is satisfied with the direct commitment of a South African bank without requiring additional confirmation. The Direct Letter of Credit contains detailed specifications about the transaction, including payment terms, document requirements, and shipping conditions, all structured to comply with both South African banking regulations and international standards (UCP 600). It's particularly useful in cross-border transactions where parties seek a secure, standardized payment mechanism that balances the interests of both buyers and sellers while ensuring regulatory compliance with South African foreign exchange controls and banking legislation.

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

1. Bank Details and Reference: Issuing bank's details, letter of credit number, and date of issuance

2. Beneficiary Information: Complete details of the beneficiary including full name, address, and bank account information

3. Applicant Information: Complete details of the applicant (buyer) including full name, address, and reference numbers

4. Credit Amount and Currency: Precise specification of the credit amount, currency, and any tolerance levels

5. Form of Credit: Specification that this is an irrevocable direct letter of credit

6. Expiry Details: Expiry date and place of the letter of credit

7. Payment Terms: Specification of payment terms, including whether payment is at sight or deferred

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

9. Shipment Terms: Details of shipment including latest shipment date, partial shipments, and transhipment conditions

10. Description of Goods/Services: Precise description of the goods or services covered by the letter of credit

11. Governing Law and Jurisdiction: Statement of South African law as governing law and UCP 600 application

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

1. Transfer Conditions: Include when the letter of credit is transferable, specifying the terms and conditions of transfer

2. Special Conditions: Any additional conditions or requirements specific to the transaction

3. Back-to-Back Provisions: Include when the letter of credit is part of a back-to-back arrangement

4. Revolving Credit Terms: Include when the letter of credit is revolving, specifying the revolving terms and conditions

5. Red Clause Provisions: Include when advance payment provisions are required, specifying the terms of advance payment

6. Green Clause Provisions: Include when storage provisions are required, specifying terms for storage of goods

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

1. Schedule A - Document Requirements: Detailed checklist of required documents and their specific requirements

2. Schedule B - Technical Specifications: Detailed technical specifications of goods or services when applicable

3. Schedule C - Banking Instructions: Specific instructions for document presentation and payment procedures

4. Appendix 1 - UCP 600 Disclaimer: Standard disclaimers and relevant UCP 600 provisions

5. Appendix 2 - Fee Schedule: Schedule of bank charges and fees applicable to the letter of credit

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

Jurisdiction

South Africa

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions








































Clauses

























Relevant Industries

Banking and Financial Services

International Trade

Import/Export

Manufacturing

Retail

Commodities Trading

Agriculture

Mining

Energy

Telecommunications

Construction

Shipping and Logistics

Relevant Teams

Trade Finance

International Banking

Legal

Compliance

Risk Management

Treasury

Operations

Documentary Credits

Import Operations

Export Operations

Financial Control

Credit Risk

Relevant Roles

Trade Finance Manager

International Trade Specialist

Letter of Credit Officer

Banking Operations Manager

Compliance Officer

Treasury Manager

Financial Controller

Import Manager

Export Manager

Documentary Credits Specialist

Risk Manager

Chief Financial Officer

Banking Relationship Manager

Trade Operations Officer

Credit Risk Officer

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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