The Documentary Letter of Credit serves as a fundamental instrument in international trade finance, providing security and payment assurance to parties involved in cross-border transactions. This document is particularly crucial when parties are operating under different legal systems and require a reliable payment mechanism. Under German law, the Letter of Credit combines international banking practices (UCP 600) with domestic legal requirements, including compliance with the German Banking Act and Commercial Code. It is typically used when there's limited trading history between parties, significant transaction values are involved, or when dealing with certain high-risk markets. The document details the conditions for payment, required documentation, timeframes, and the obligations of all parties involved, while ensuring compliance with German and EU banking regulations.
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1. Bank Details and Reference Number: Issuing bank's details, letter of credit number, and date of issuance
2. Beneficiary Information: Complete name and address of the beneficiary (seller/exporter)
3. Applicant Information: Complete name and address of the applicant (buyer/importer)
4. Currency and Amount: The currency and maximum amount of the credit
5. Expiry Date and Place: When and where the credit expires for presentation of documents
6. Available With/By: Where the credit is available and manner of availability (sight, deferred payment, acceptance, or negotiation)
7. Partial Shipments/Transhipment: Whether partial shipments and/or transhipment are allowed or prohibited
8. Loading/Dispatch/Taking in Charge: Place of taking in charge, dispatch, or loading
9. Port/Airport of Discharge: Final destination of the goods
10. Latest Date of Shipment: Final date by which shipment must be made
11. Goods Description: Brief description of the goods and/or services
12. Required Documents: List of documents required for presentation
13. Additional Conditions: Special conditions or requirements specific to this credit
14. Charges: Specification of which party bears which bank charges
1. Confirmation Instructions: Used when confirmation is requested from another bank
2. Transferability Clause: Include when the credit needs to be transferable to another beneficiary
3. Back-to-Back Provisions: Used when the credit will serve as support for another credit
4. Red Clause Provisions: Include when advance payment facilities are to be provided to the beneficiary
5. Revolving Credit Terms: Used when the credit is intended to revolve in amount or time
6. Green Clause Provisions: Include when storage facilities and advance payment are required
7. Insurance Instructions: Used when specific insurance requirements need to be detailed beyond standard requirements
1. Schedule A - Commercial Invoice Template: Prescribed format for the commercial invoice to be presented
2. Schedule B - Transport Document Requirements: Detailed specifications for acceptable transport documents
3. Schedule C - Insurance Document Requirements: Detailed specifications for acceptable insurance documents
4. Schedule D - Certificate of Origin Requirements: Specifications for acceptable certificate of origin
5. Schedule E - Inspection Certificate Requirements: Format and requirements for any required inspection certificates
6. Appendix 1 - Bank's Standard Fee Schedule: Standard fees and charges applicable to the letter of credit
7. Appendix 2 - Amendment Request Form: Standard form for requesting amendments to the letter of credit
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Logistics and Transportation
Commodities Trading
Retail
Agriculture
Energy
Mining
Textiles
Consumer Goods
Industrial Equipment
Automotive
Chemical Industry
Relevant Teams
Trade Finance
International Banking
Treasury
Legal
Compliance
Risk Management
International Sales
Supply Chain
Finance
Operations
Commercial Banking
Documentary Credits
Relevant Roles
Trade Finance Manager
International Business Development Manager
Import/Export Coordinator
Treasury Manager
Banking Relationship Manager
Documentary Credits Specialist
Trade Operations Officer
Financial Controller
Compliance Officer
Risk Manager
Commercial Banking Officer
International Sales Manager
Supply Chain Manager
Chief Financial Officer
Trade Finance Analyst
Letters of Credit Specialist
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