The Divisible Letter of Credit is a vital financial instrument in Philippine international trade, designed to facilitate transactions where goods or services are delivered in multiple shipments or phases. This document type is particularly relevant when businesses need flexibility in drawing against the credit amount while maintaining the security of a bank-guaranteed payment. Under Philippine jurisdiction, these instruments are regulated by the Bangko Sentral ng Pilipinas and must comply with both local banking laws and international standards such as UCP 600. The document specifies all terms and conditions for partial drawings, including minimum drawing amounts, maximum number of drawings permitted, and documentation requirements for each drawing. It's commonly used in large-scale trade transactions, especially in industries with periodic delivery schedules or long-term supply contracts.
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1. Letter Reference and Date: Unique LC reference number and issuance date
2. Applicant Details: Full name, address, and contact information of the party requesting the LC
3. Beneficiary Details: Full name, address, and contact information of the party in whose favor the LC is issued
4. Amount and Currency: Total credit amount, currency, and details of permitted divisions/drawings
5. Divisibility Terms: Specific conditions and mechanisms for partial drawings, minimum drawing amounts, and maximum number of drawings permitted
6. Expiry Details: Expiration date and place for presentation of documents
7. Available With/By: Specification of the nominated bank and method of availability (sight, deferred payment, etc.)
8. Documents Required: List of required documents for each drawing under the LC
9. Shipment Terms: Details of permitted partial shipments, transhipment, and shipping deadlines
10. Presentation Terms: Timeframe and conditions for document presentation after shipment
11. Governing Law: Statement of applicable law (Philippines) and UCP 600 applicability
1. Revolving Terms: Include when the LC is both divisible and revolving, specifying reinstatement conditions
2. Transfer Rights: Include when the LC is transferable, specifying conditions for transfer
3. Special Payment Conditions: Include for any special payment arrangements or conditions
4. Red Clause Provisions: Include if advance payment features are required
5. Green Clause Provisions: Include if warehouse receipt financing features are needed
6. Back-to-Back Provisions: Include if the LC is part of a back-to-back arrangement
1. Schedule A - Description of Goods: Detailed specification of goods, including quality, quantity, and pricing details
2. Schedule B - Drawing Schedule: Detailed timeline and conditions for partial drawings
3. Schedule C - Required Documents Format: Templates or specific formats for required documents
4. Appendix 1 - Bank Details: Complete banking information for all relevant parties
5. Appendix 2 - Special Instructions: Any additional instructions for document handling or payment processing
6. Appendix 3 - Authorized Signatories: List of authorized signatories for document authentication
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Commodities Trading
Shipping and Logistics
Agricultural Trade
Wholesale Distribution
Retail
Energy and Resources
Relevant Teams
Trade Finance
International Banking
Credit Operations
Documentary Credits
Treasury
Compliance
Risk Management
Finance
Legal
Supply Chain
Trade Operations
Relevant Roles
Trade Finance Manager
International Banking Officer
Credit Operations Manager
Documentary Credits Specialist
Import/Export Manager
Treasury Manager
Compliance Officer
Trade Operations Analyst
Letter of Credit Specialist
Financial Controller
Supply Chain Manager
Chief Financial Officer
Banking Relationship Manager
Trade Finance Analyst
Risk Management Officer
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