Commercial Letters of Credit are essential financial instruments in international trade transactions under South African law. They are typically used when there is a need for secure payment mechanisms in cross-border trade, particularly where parties may not have established trading relationships or where regulatory requirements necessitate formal banking channels. A Commercial Letter of Credit provides payment security to sellers while offering buyers the assurance that payment will only be made against prescribed documents. The document must comply with South African banking regulations, foreign exchange controls, and international banking practices. It includes detailed specifications for payment conditions, required documentation, shipping terms, and compliance requirements. This instrument is particularly relevant in the South African context due to the country's significant involvement in international trade and its comprehensive regulatory framework for cross-border transactions.
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1. Bank Details and Reference Number: Issuing bank's details, Letter of Credit number, and date of issuance
2. Beneficiary Information: Complete name and address of the party receiving the Letter of Credit
3. Applicant Information: Complete name and address of the party requesting the Letter of Credit
4. Amount and Currency: The credit amount and currency, including whether any tolerance is permitted
5. Expiry Date and Place: The final date and location for presentation of documents
6. Form of Credit: Whether the credit is irrevocable (standard under UCP 600) and any transfer conditions
7. Available With/By: The name of the bank with which the credit is available and manner of availability (sight, deferred payment, etc.)
8. Shipment Terms: Latest shipment date, partial shipments, transhipment permissions/restrictions
9. Required Documents: Detailed list of all documents required for presentation
10. Additional Conditions: Any special conditions or requirements that must be met
11. Bank Charges: Specification of which party bears which bank charges
12. Presentation Period: Time period after shipment within which documents must be presented
13. Governing Law: Specification of South African law as governing law and UCP 600 application
1. Revolving Credit Terms: Include when the Letter of Credit is revolving, specifying reinstatement conditions
2. Red Clause Provisions: Include when advance payment is permitted under the Letter of Credit
3. Back-to-Back Provisions: Include when the Letter of Credit is issued against another Letter of Credit
4. Transferability Conditions: Include detailed conditions when the Letter of Credit is transferable
5. Green Clause Provisions: Include when storage of goods is involved with advance payment
6. Confirmation Instructions: Include when confirmation by another bank is required
7. Reimbursement Instructions: Include when specific reimbursement arrangements between banks are required
1. Schedule A - Document Requirements: Detailed specifications for each required document, including format and content requirements
2. Schedule B - Goods Description: Detailed description of the goods, including specifications, quantity, and unit prices
3. Schedule C - Special Payment Conditions: Any special payment terms, calculations, or conditions that apply
4. Appendix 1 - Standard Banking Forms: Standard forms required by the issuing bank for document presentation
5. Appendix 2 - Transport Requirements: Specific requirements for transport documents and shipping arrangements
6. Appendix 3 - Insurance Requirements: Detailed insurance requirements and acceptable insurance document formats
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Agriculture and Agribusiness
Mining and Resources
Retail and Consumer Goods
Energy and Utilities
Construction and Infrastructure
Logistics and Transportation
Import/Export
Commodities Trading
Relevant Teams
Legal
Finance
International Trade
Treasury
Compliance
Risk Management
Trade Operations
Banking Operations
Commercial Banking
Documentary Credits
Supply Chain
Procurement
Credit Risk
Relevant Roles
Trade Finance Manager
International Trade Specialist
Documentary Credits Officer
Export Finance Manager
Import Operations Manager
Compliance Officer
Legal Counsel
Treasury Manager
Chief Financial Officer
Banking Relationship Manager
Trade Operations Director
Risk Management Officer
Finance Director
Commercial Banking Officer
International Business Development Manager
Supply Chain Manager
Procurement Manager
Credit Risk Officer
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