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Conditional Letter Of Credit for Indonesia

Conditional Letter Of Credit Template for Indonesia

A Conditional Letter of Credit under Indonesian law is a specialized banking instrument that provides a secure method of payment in international trade transactions, subject to specific conditions being met. This document, governed by Indonesian banking regulations and international UCP 600 rules, establishes the terms under which a bank commits to pay a beneficiary upon the satisfaction of predetermined conditions and presentation of compliant documents. The instrument incorporates specific requirements under Indonesian banking law, including compliance with Bank Indonesia regulations on foreign exchange transactions and payment traffic, while providing the security and flexibility needed for international trade finance.

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Conditional Letter Of Credit

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What is a Conditional Letter Of Credit?

The Conditional Letter of Credit serves as a crucial financial instrument in international trade transactions under Indonesian law. It is typically used when parties require a secure payment method with specific conditions that must be met before payment is released. This document type is particularly relevant when dealing with cross-border transactions where the buyer's bank provides payment assurance to the seller, subject to the presentation of compliant documents and satisfaction of predetermined conditions. The document must comply with Indonesian banking regulations, particularly Law No. 7 of 1992 on Banking (as amended) and relevant Bank Indonesia regulations, while also adhering to international banking practices under UCP 600. A Conditional Letter of Credit is especially useful in situations where parties need additional security measures beyond standard L/C requirements, such as specific performance conditions or documentary requirements unique to the transaction or Indonesian regulatory environment.

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

1. Bank Details and Reference: Issuing bank's details, L/C reference number, and date of issuance

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

3. Applicant Information: Complete details of the applicant including name, address, and contact information

4. Credit Amount and Currency: Specification of the L/C amount and currency, including whether any tolerance is permitted

5. Credit Type and Availability: Specification that this is a conditional L/C and how/where the credit is available (e.g., by negotiation, by deferred payment)

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

7. Conditions for Payment: Clear statement of all conditions that must be met before payment can be made

8. Required Documents: Detailed list of all documents that must be presented for payment

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

10. Presentation Period: Time period within which documents must be presented after shipment

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

1. Transferability Clause: Include when the L/C needs to be transferable to another beneficiary

2. Revolving Terms: Include when the L/C is revolving, specifying the revolving terms and conditions

3. Red Clause Provisions: Include when advance payment facilities are required

4. Back-to-Back Provisions: Include when the L/C will be used as collateral for another L/C

5. Special Instructions: Include when there are additional bank-specific or transaction-specific requirements

6. Confirmation Instructions: Include when confirmation from another bank is required or prohibited

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

1. Schedule A - Commercial Invoice Requirements: Detailed specifications for the format and content of commercial invoices

2. Schedule B - Transport Document Requirements: Specific requirements for bills of lading or other transport documents

3. Schedule C - Insurance Document Requirements: Details of required insurance coverage and documentation

4. Appendix 1 - Additional Conditions: List of specific conditions that must be met before payment

5. Appendix 2 - Form of Demand: Template for submission of payment demand under the L/C

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions



































Clauses




























Relevant Industries

International Trade

Banking & Financial Services

Manufacturing

Import/Export

Shipping & Logistics

Commodities Trading

Retail

Wholesale

Agriculture

Mining

Relevant Teams

Trade Finance

International Banking

Credit Operations

Documentary Credits

Treasury

Compliance

Risk Management

Legal

Trade Operations

Commercial Banking

Relevant Roles

Trade Finance Manager

International Banking Officer

Credit Manager

Documentary Credits Specialist

Import/Export Manager

Treasury Manager

Compliance Officer

Trade Operations Manager

Financial Controller

Risk Manager

Commercial Banking Manager

Letter of Credit Specialist

International Trade Specialist

Banking Relationship Manager

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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