Standby Letter of Credit

The Standby Letter of Credit is a document issued by a bank to provide security for the obligations of the applicant under an agreement. It is an irrevocable letter of credit that can be used by the beneficiary to demand payment from the issuing bank. The document begins with a quote and includes the issuing bank's name and the beneficiary's name. It is addressed to the beneficiary and starts with a salutation.

 

The letter of credit establishes the maximum amount that can be paid to the beneficiary as security for the obligations of the applicant. It specifies that the letter of credit is payable upon the beneficiary's demand via facsimile, tested telex, or authenticated swift. The effective date and expiry date of the letter of credit are also mentioned.

 

The document includes conditions for the demands presented by the beneficiary. It states that demands must be in writing and can be made by letter, fax, or telex. It also specifies whether partial payments and multiple presentations are allowed. All bank charges are stated to be the responsibility of the applicant.

 

The document includes a clause that limits the liability of the issuing bank unless gross negligence or willful misconduct is involved. It also states that no party other than the issuing bank can take legal action against any officer, employee, or agent of the bank in relation to the letter of credit. The rights under the letter of credit cannot be assigned or transferred.

 

The document includes a provision that exempts the beneficiary and the issuing bank from taking any action that would violate the laws of the United States or the United Kingdom. It specifies that the letter of credit is subject to the International Standby Practices 98 and will be governed by the laws of the jurisdiction state. The issuing bank agrees to submit to the non-exclusive jurisdiction of the courts of the jurisdiction state.

 

The letter concludes with a closing salutation and the name of the issuing bank. It includes a note that any amendment or waiver relating to the rights or obligations of the issuing bank requires written consent.

 

In summary, the Standby Letter of Credit is an important document that provides security for the obligations of the applicant. It establishes the maximum amount that can be paid to the beneficiary and includes conditions for the demands presented by the beneficiary. It also includes clauses that limit the liability of the issuing bank and exempt the parties from actions that would violate the laws of the United States or the United Kingdom.

How to use this document?

1. Enter the issuing bank's name and the beneficiary's name in the document.

2. Specify the maximum amount that can be paid to the beneficiary as security for the obligations of the applicant.

3. State that the letter of credit is payable upon the beneficiary's demand via facsimile, tested telex, or authenticated swift.

4. Include the effective date and expiry date of the letter of credit.

5. Specify whether partial payments and multiple presentations are allowed.

6. Clarify that all bank charges are the responsibility of the applicant.

7. Limit the liability of the issuing bank unless gross negligence or willful misconduct is involved.

8. State that no party other than the issuing bank can take legal action against any officer, employee, or agent of the bank in relation to the letter of credit.

9. Prohibit the assignment or transfer of the rights under the letter of credit.

10. Ensure compliance with the laws of the United States and the United Kingdom.

11. Specify that the letter of credit is subject to the International Standby Practices 98.

12. Agree to submit to the non-exclusive jurisdiction of the courts of the jurisdiction state.

13. Include a closing salutation and the name of the issuing bank.

14. Obtain written consent for any amendment or waiver relating to the rights or obligations of the issuing bank.