The Letter for Credit Terms is a crucial document in UAE business operations, typically used when establishing or modifying credit relationships between business entities or between financial institutions and their clients. It serves as a formal communication of approved credit facilities and their associated terms and conditions. The document is particularly important in the UAE's business environment, where credit relationships must comply with both federal commercial laws and, where applicable, Sharia principles. The letter includes essential information such as credit limits, payment terms, security requirements, and default provisions, all structured to comply with UAE legislation and banking practices. It forms part of the broader credit documentation framework and is often required for trade finance, supplier relationships, and banking facilities in the UAE market.
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1. Letter Header: Company letterhead, date, reference number, and recipient's complete address details
2. Subject Line: Clear indication that this is regarding Credit Terms/Credit Facility
3. Salutation: Formal greeting to the authorized representative
4. Credit Amount: Specification of the approved credit limit and currency
5. Payment Terms: Clear statement of payment period (e.g., 30, 60, or 90 days) and payment calculation method
6. Security Requirements: Details of any required security, guarantees, or collateral
7. Credit Review Period: Frequency and conditions of credit review
8. Default Provisions: Consequences of late payment or default
9. Governing Law Statement: Reference to UAE law governance
10. Acceptance Requirements: Instructions for acknowledging and accepting the terms
11. Closing and Signature: Formal closing, authorized signatory details
1. Trade References: Include when dealing with new business relationships requiring reference checks
2. Insurance Requirements: Include when specific insurance coverage is required as part of credit terms
3. Parent Company Guarantee: Include when dealing with subsidiaries requiring parent company support
4. Specific Trading Conditions: Include when there are industry-specific terms or conditions
5. Islamic Banking Compliance: Include when the credit facility needs to comply with Sharia principles
1. Schedule 1: Company Information Form: Template for collecting detailed company information and financial contacts
2. Schedule 2: Payment Instructions: Detailed banking information and payment procedures
3. Schedule 3: Required Documents: List of documents required for credit facility activation
4. Schedule 4: Security Documentation: Forms and requirements for security/guarantee documentation
5. Appendix A: Terms and Conditions: Detailed standard terms and conditions referenced in the main letter
6. Appendix B: Financial Reporting Requirements: Specific requirements for ongoing financial reporting
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Manufacturing
Retail and Wholesale
Construction and Real Estate
Trading and Import/Export
Logistics and Transportation
Oil and Gas
Healthcare
Technology and Communications
Professional Services
Hospitality and Tourism
Relevant Teams
Finance
Legal
Treasury
Credit Control
Risk Management
Compliance
Commercial Operations
Procurement
Accounts Receivable
Trade Finance
Relevant Roles
Chief Financial Officer
Finance Director
Credit Manager
Treasury Manager
Financial Controller
Accounts Receivable Manager
Risk Management Officer
Commercial Director
Legal Counsel
Compliance Officer
Managing Director
Supply Chain Manager
Procurement Manager
Business Development Manager
Company Secretary
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