A Clean Letter of Credit is a crucial trade finance instrument used in Australian and international commerce to facilitate secure trade transactions. It is particularly valuable when parties are conducting business across borders and need a reliable payment mechanism. The document represents a bank's irrevocable undertaking to pay the beneficiary upon presentation of compliant documents, without requiring additional security or collateral. Operating under Australian banking laws and regulations, including the Banking Act 1959 and incorporating UCP 600 rules, this instrument provides a balanced approach to managing trade risks. Clean Letters of Credit are distinguished from other types by their straightforward documentation requirements, making them particularly attractive for routine trade transactions where the parties seek efficiency without compromising security.
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1. Issuing Bank Details: Complete details of the issuing bank including name, address, SWIFT code, and reference numbers
2. Letter of Credit Number: Unique identification number of the Letter of Credit
3. Date of Issue: Date when the Letter of Credit is issued
4. Beneficiary Details: Complete name and address of the beneficiary (seller/exporter)
5. Applicant Details: Complete name and address of the applicant (buyer/importer)
6. Currency and Amount: Specification of the currency and amount of the Letter of Credit
7. Expiry Date: Date and place of expiry of the Letter of Credit
8. Payment Terms: Specification of when and how payment will be made (at sight, deferred payment, etc.)
9. Available With/By: Specification of where and how the credit is available (nominated bank details)
10. Required Documents: List of documents required for presentation
11. Shipment Terms: Details of shipment including latest shipment date and partial shipments if applicable
1. Transferability Clause: Include when the Letter of Credit needs to be transferable to a second beneficiary
2. Revolving Terms: Include when the Letter of Credit is revolving, specifying the revolving conditions
3. Red Clause: Include when advance payment provisions are required
4. Green Clause: Include when warehouse storage provisions are required
5. Back-to-Back Provisions: Include when the Letter of Credit is part of a back-to-back arrangement
6. Confirmation Instructions: Include when confirmation by another bank is required or prohibited
7. Special Conditions: Include when there are additional terms or conditions specific to the transaction
1. Schedule A - Document Requirements: Detailed list and format of all required documents including specific wording requirements
2. Schedule B - Banking Instructions: Specific instructions for handling documents and processing payment
3. Schedule C - Shipping Terms: Detailed shipping requirements including ports, modes of transport, and timelines
4. Appendix 1 - Document Templates: Standard templates for required documents such as bills of lading or commercial invoices
5. Appendix 2 - UCP 600 Incorporation: Specific articles of UCP 600 that apply to this Letter of Credit
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Agriculture and Food
Mining and Resources
Retail
Wholesale
Energy
Commodities Trading
Import/Export
Shipping and Logistics
Insurance
Relevant Teams
Trade Finance
Treasury
International Banking
Commercial Banking
Risk Management
Compliance
Legal
International Sales
Supply Chain
Financial Control
Operations
Credit Administration
Relevant Roles
Trade Finance Manager
International Business Development Manager
Chief Financial Officer
Treasury Manager
Import/Export Coordinator
Trade Operations Manager
Documentary Credits Specialist
Banking Relationship Manager
Commercial Banking Officer
Trade Finance Analyst
Compliance Officer
Risk Manager
Financial Controller
Supply Chain Manager
International Sales Manager
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