The Deferred LC document is essential for international trade transactions where immediate payment is not required or desired, particularly in the Saudi Arabian market. It is commonly used when buyers need extended payment terms while providing sellers with bank-backed payment security. The document encompasses specific terms for deferred payment structures that comply with Islamic finance principles, typically used for large commercial transactions or ongoing trade relationships. The Deferred LC must adhere to Saudi Arabian banking regulations, SAMA guidelines, and Sharia requirements while maintaining consistency with international UCP 600 rules. It serves as a crucial instrument in facilitating trade finance by providing detailed payment terms, documentary requirements, and shipping conditions, while ensuring all aspects of the transaction are compliant with both local and international banking practices.
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1. Parties: Details of the applicant (buyer), beneficiary (seller), and issuing bank
2. Background: Context of the underlying commercial transaction and purpose of the LC
3. Definitions: Key terms used in the LC document including banking, trade, and Sharia-compliant terms
4. LC Amount and Currency: Specification of the credit amount and currency of payment
5. Deferred Payment Terms: Details of the payment structure, maturity date, and payment timeline
6. Documentary Requirements: List of required documents for LC activation and payment
7. Shipping Terms: Specifications for shipment, latest shipment date, and port details
8. Presentation Period: Timeframe for document presentation after shipment
9. Islamic Finance Compliance: Declarations and structures ensuring Sharia compliance
10. Governing Law and Jurisdiction: Application of Saudi Arabian law and relevant jurisdictional details
1. Partial Shipments: Include when partial shipments are allowed or prohibited
2. Transhipment: Include when specific transhipment requirements exist
3. Insurance Requirements: Include when specific insurance coverage is required
4. Bank Charges: Include when there are specific arrangements for bank charges
5. Confirmation Instructions: Include when LC confirmation by another bank is required
6. Special Conditions: Include for any transaction-specific requirements or restrictions
7. Force Majeure: Include when specific force majeure provisions are needed
1. Schedule A - Commercial Invoice Requirements: Detailed specifications for commercial invoice preparation
2. Schedule B - Transport Document Requirements: Specifications for bills of lading or other transport documents
3. Schedule C - Goods Description: Detailed description of goods, quantities, and specifications
4. Schedule D - Price Calculation: Breakdown of prices, costs, and payment calculations
5. Appendix 1 - Required Document Formats: Templates or formats for required documents
6. Appendix 2 - Bank Details: Banking information for all parties involved
7. Appendix 3 - Shipping Schedule: Detailed timeline for shipment and delivery
8. Appendix 4 - Sharia Compliance Certificate: Documentation confirming Islamic finance compliance
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Oil and Gas
Petrochemicals
Construction
Agriculture
Automotive
Consumer Goods
Industrial Equipment
Mining
Textile and Apparel
Technology and Electronics
Relevant Teams
Trade Finance
International Banking
Corporate Banking
Compliance
Legal
Risk Management
Treasury
Operations
Supply Chain
Finance
Islamic Banking
Documentary Credits
Trade Operations
Relevant Roles
Trade Finance Manager
Letter of Credit Specialist
International Banking Officer
Compliance Officer
Islamic Banking Specialist
Treasury Manager
Import Manager
Export Manager
Trade Operations Manager
Financial Controller
Documentary Credits Manager
Risk Management Officer
Corporate Banking Manager
Supply Chain Manager
Chief Financial Officer
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