The Unconditional Letter of Credit serves as a fundamental instrument in international trade finance, providing security and payment assurance to parties engaged in cross-border transactions. It is particularly relevant in the South African context, where it must comply with both the international UCP 600 rules and local banking regulations, including the Banks Act 94 of 1990 and Exchange Control Regulations. This document is typically used when a seller requires guaranteed payment security from a buyer's bank, independent of the underlying commercial contract. The unconditional nature means the issuing bank's obligation to pay is absolute and cannot be modified by external factors, provided the stipulated documents are presented in compliance with the credit terms. The document includes essential elements such as credit amount, validity period, document requirements, and payment terms, structured to meet both international standards and South African regulatory requirements.
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1. Letter Reference Number: Unique identifier for the Letter of Credit
2. Date of Issuance: The date when the Letter of Credit is issued
3. Applicant Details: Full name, registration number and address of the party requesting the Letter of Credit
4. Beneficiary Details: Full name, registration number and address of the party in whose favor the Letter of Credit is issued
5. Issuing Bank Details: Name, branch, and contact details of the issuing bank
6. Credit Amount: The maximum amount available under the Letter of Credit and currency
7. Expiry Date: The final date until which the Letter of Credit is valid
8. Place of Expiry: Location where the Letter of Credit expires
9. Payment Terms: Specification of when and how payment will be made (at sight, deferred payment, etc.)
10. Presentation Terms: Where and how documents should be presented
11. Required Documents: List of documents that must be presented for payment
12. Special Conditions: Any specific conditions or requirements for payment
13. UCP Declaration: Statement that the Letter of Credit is subject to UCP 600
1. Advising Bank Details: Details of the advising bank, if different from the issuing bank - used when there's an intermediary bank
2. Confirmation Instructions: Instructions regarding confirmation - used when confirmation by another bank is required
3. Transhipment Terms: Terms regarding allowed or prohibited transhipment - used for Letters of Credit involving shipping
4. Partial Shipment Terms: Whether partial shipments are allowed - used for Letters of Credit involving shipping
5. Transfer Terms: Terms regarding transferability - used when the Letter of Credit needs to be transferable
6. Back-to-Back Provisions: Provisions for back-to-back credits - used in complex trade transactions
7. Red Clause Provisions: Advance payment provisions - used when advance payments are required
1. Schedule A - Document Requirements: Detailed list and specifications of all required documents including format, content, and number of copies
2. Schedule B - Special Payment Conditions: Detailed terms and conditions for payment including any specific requirements or restrictions
3. Schedule C - Goods Description: Detailed description of the goods or services covered by the Letter of Credit (if applicable)
4. Appendix 1 - Standard Banking Forms: Standard forms required by the issuing bank for document presentation
5. Appendix 2 - Specimen Signatures: Authorized signatures for document verification
Authors
Relevant legal definitions
Clauses
Relevant Industries
Banking & Financial Services
International Trade
Import/Export
Manufacturing
Retail
Commodities Trading
Agriculture
Mining
Energy
Construction
Shipping & Logistics
Wholesale Distribution
Relevant Teams
Trade Finance
International Banking
Documentary Credits
Risk Management
Compliance
Treasury
Finance
Legal
Operations
Credit Administration
Trade Operations
Relevant Roles
Trade Finance Manager
International Banking Officer
Documentary Credits Specialist
Export Finance Manager
Import Finance Manager
Trade Operations Manager
Credit Risk Officer
Compliance Officer
Treasury Manager
Chief Financial Officer
Financial Controller
Banking Relationship Manager
Trade Finance Analyst
Letter of Credit Specialist
International Trade Specialist
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