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Deferred Lc for Saudi Arabia

Deferred Lc Template for Saudi Arabia

A Deferred Letter of Credit document under Saudi Arabian law is a specialized trade finance instrument that combines conventional banking practices with Islamic finance principles. It serves as a payment guarantee where the issuing bank commits to pay the beneficiary at a specified future date, typically after the presentation of compliant documents. The document must comply with Saudi Arabian banking regulations, SAMA guidelines, and Sharia principles while adhering to international UCP 600 rules. It includes detailed terms for deferred payment, document requirements, shipping conditions, and specific provisions ensuring compliance with both international trade practices and Islamic finance requirements.

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Deferred Lc

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What is a Deferred Lc?

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.

What sections should be included in a Deferred Lc?

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

What sections are optional to include in a Deferred Lc?

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

What schedules should be included in a Deferred Lc?

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

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

Saudi Arabia

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
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

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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