The Usance Letter of Credit is a vital trade finance instrument commonly used in UAE's international trade transactions. It provides a secure method of payment while offering extended payment terms to importers and guaranteed payment to exporters. The document combines elements of traditional Letters of Credit with specific provisions for deferred payment, typically ranging from 30 to 180 days. Under UAE law, particularly Federal Law No. 18 of 1993 and Central Bank regulations, Usance LCs must comply with both local requirements and international standards (UCP 600). This document is especially relevant in scenarios where buyers need extended payment terms while ensuring sellers receive bank-backed payment guarantees, making it particularly suitable for high-value international trade transactions in the UAE market.
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1. LC Number and Date: Unique identification number and issuance date of the Letter of Credit
2. Applicant Details: Full name, address and contact details of the party requesting the LC (buyer/importer)
3. Beneficiary Details: Full name, address and contact details of the party in whose favor the LC is issued (seller/exporter)
4. Issuing Bank Details: Name and details of the bank issuing the LC
5. Currency and Amount: The currency and maximum amount for which the LC is issued
6. Usance Terms: Specific payment terms including maturity period (e.g., 60 days from bill of lading date)
7. Expiry Date and Place: Final date and location for presentation of documents
8. Shipment Terms: Latest shipment date, partial shipments, transhipment provisions
9. Required Documents: List of documents required for presentation (invoices, transport documents, etc.)
10. Goods Description: Detailed description of the goods being traded
11. Incoterms: Specified international commercial terms applicable to the transaction
1. Advising Bank Details: Details of the bank advising the LC to the beneficiary, if different from issuing bank
2. Confirming Bank Details: Details of the bank adding confirmation to the LC, if confirmation is requested
3. Transferability Clause: Include when the LC needs to be transferable to another beneficiary
4. Red Clause: Include when advance payment provisions are required
5. Insurance Instructions: Specific requirements for insurance coverage, if not covered by trade terms
6. Special Conditions: Any additional terms or conditions specific to the transaction
1. Document Presentation Schedule: Detailed checklist of required documents and their specific requirements
2. Goods Specification Schedule: Detailed technical specifications of goods when too extensive for main body
3. Price Schedule: Detailed breakdown of prices if multiple items or complex pricing structure
4. Banking Charges Schedule: Detailed breakdown of all applicable banking charges and their allocation
5. Amendment Format: Standard format for future amendments to the LC if required
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Financial Services
Manufacturing
Import/Export
Retail
Commodities Trading
Construction
Oil and Gas
Textiles
Agriculture
Automotive
Electronics
Relevant Teams
Trade Finance
International Banking
Credit Operations
Treasury
Risk Management
Compliance
Legal
Commercial Banking
Corporate Banking
Documentary Credits
Trade Operations
Finance
Procurement
Supply Chain
Relevant Roles
Trade Finance Manager
Import Manager
Export Manager
Credit Manager
Financial Controller
Treasury Manager
Documentary Credits Specialist
Trade Operations Officer
Relationship Manager
Risk Manager
Compliance Officer
Chief Financial Officer
Supply Chain Manager
Procurement Manager
Banking Operations Manager
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