Letter of Credit

The document titled 'Letter of Credit' is a formal letter issued by a bank to a beneficiary, providing them with a non-transferable documentary credit. The letter is addressed to the party who will receive the credit and includes important information such as the reference number, beneficiary's name and address, instructing party's name and address, account number, amount, and expiry date. The purpose of this letter is to outline the terms and conditions that apply to the documentary credit.

 

The letter begins with a salutation and a brief introduction, stating that the bank has been mandated by the instructing party to issue the documentary credit to the beneficiary. It emphasizes that the credit is non-transferable and must be paid upon the presentation of specific documents. The bank assures the beneficiary that it will honor any drafts drawn under the terms of the credit and deposit the amount directly into the beneficiary's designated account.

 

The letter also includes a clause regarding compliance with laws. It states that neither the beneficiary nor the bank is required to take any action that would violate the laws of the United States or the United Kingdom, including laws related to foreign boycotts, corruption, and bribery. This clause ensures that both parties are aware of their legal obligations and prevents any potential conflicts.

 

The document concludes with a statement that the documentary credit is irrevocable and subject to the Uniform Customs and Practice for Documentary Credits. It specifies that the governing laws are those of the jurisdiction state where the credit was issued.

 

In summary, the 'Letter of Credit' is a formal document issued by a bank to provide a non-transferable documentary credit to a beneficiary. It outlines the terms and conditions of the credit, including payment upon presentation of specific documents and compliance with relevant laws. The letter is legally binding and ensures that both parties understand their rights and obligations.

How to use this document?

1. Review the letter: Read the entire letter carefully to understand its purpose and contents.

2. Verify beneficiary information: Ensure that the beneficiary's name and address mentioned in the letter are correct and match the intended recipient.

3. Check account number: Confirm that the account number provided in the letter is accurate and belongs to the beneficiary.

4. Understand instructing party details: Familiarize yourself with the name and address of the instructing party mentioned in the letter.

5. Note the amount and expiry date: Take note of the specified amount and the expiry date mentioned in the letter.

6. Familiarize with required documents: Understand the documents that need to be presented to the bank to claim the credit.

7. Comply with laws: Ensure that any actions taken in relation to the letter of credit do not violate the laws of the United States or the United Kingdom.

8. Understand irrevocability and non-transferability: Acknowledge that the credit is irrevocable and cannot be transferred to another party.

9. Consult legal advice if needed: If there are any concerns or questions regarding the terms and conditions of the letter of credit, seek legal advice.

10. Keep a copy for reference: Retain a copy of the letter for future reference and record-keeping purposes.