The Letter of Credit Negotiable Instrument is a specialized financial document used in international trade transactions under Indian jurisdiction. It serves as a secure payment mechanism where a bank guarantees payment to a seller on behalf of a buyer, subject to the presentation of specified documents proving the completion of the trade transaction. This document type is particularly crucial in cross-border trades where parties seek to minimize risks associated with international commercial transactions. The instrument is governed by Indian banking laws, particularly the Negotiable Instruments Act, 1881, and typically incorporates UCP 600 guidelines. It's essential when businesses require a secure, bank-backed payment guarantee in international trade, especially for high-value transactions or when trading with new partners.
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1. Letter Reference and Date: Unique LC reference number and issuance date
2. Applicant Details: Complete name and address of the party requesting the LC (typically the buyer/importer)
3. Beneficiary Details: Complete name and address of the party in whose favor the LC is issued (typically the seller/exporter)
4. Issuing Bank Details: Name and address of the bank issuing the LC
5. Credit Amount and Currency: Specific amount and currency of the LC, including any tolerance levels
6. Form of Credit: Whether irrevocable or irrevocable and confirmed
7. Expiry Date and Place: Validity period and location where the LC expires
8. Shipment Terms: Latest shipment date, partial shipments, transhipment conditions
9. Document Requirements: List of required documents for LC negotiation
10. Payment Terms: Timing and conditions of payment (sight, deferred, acceptance, negotiation)
11. Governing Law: Specification of Indian law as governing law
12. Bank Authorization: Official signatures and stamps of the issuing bank
1. Confirming Bank Details: Used when LC requires confirmation from another bank
2. Transfer Conditions: Included when the LC is transferable to another beneficiary
3. Back-to-Back Provisions: When LC allows for back-to-back credit arrangements
4. Red Clause Provisions: When advance payment facilities are provided to the beneficiary
5. Revolving Credit Terms: When LC is designed to automatically renew
6. Special Instructions: Any additional terms or conditions specific to the transaction
1. Commercial Invoice Requirements: Detailed specifications for invoice preparation
2. Transport Document Requirements: Specific requirements for bills of lading or airway bills
3. Insurance Document Requirements: Details of required insurance coverage and documentation
4. Inspection Certificate Requirements: Specifications for quality, quantity, or pre-shipment inspection
5. Product Specifications: Detailed description of goods or services covered under the LC
6. Bank Format Requirements: Standard forms and formats required by the issuing bank
Authors
Relevant legal definitions
Clauses
Relevant Industries
International Trade
Banking and Financial Services
Manufacturing
Import/Export
Retail
Commodities Trading
Agriculture
Mining
Textiles
Pharmaceuticals
Heavy Industries
Technology Hardware
Relevant Teams
Trade Finance
International Banking
Legal
Treasury
Risk Management
Compliance
Documentary Credits
Trade Operations
Supply Chain
Finance
Relevant Roles
Trade Finance Manager
International Trade Specialist
Finance Director
Treasury Manager
Import/Export Manager
Credit Manager
Banking Operations Manager
Trade Operations Officer
Compliance Officer
Documentary Credits Specialist
Chief Financial Officer
Legal Counsel
Risk Manager
Supply Chain Manager
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