This is a Drawdown Notice under a Documentary Letter of Credit issued by a Bank for a Beneficiary (Seller) on request by an Applicant (Buyer). It is a payment mechanism used in international trade to provide an economic guarantee for parties from a creditworthy bank. This drawdown notice is usually sent with the presentation of shipping documents required under the Letter of Credit.
The Drawdown Notice refers to A Documentary Letter of Credit to be issued by a Bank for a Beneficiary (Seller) on request by an Applicant (Buyer). The Documentary Letter of Credit is a payment mechanism used in international trade to provide an economic guarantee for parties from a creditworthy bank. All letters of credit require the Beneficiary to present a draft and specified documents in order to receive payment, hence the name "documentary credit". The most common scenario for a Letter of Credit to be issued is where two parties enter into an agreement or a deal, and they do not know each other’s credibility well enough. The Drawdown Notice certifies that a specified sum is due under the Letter of Credit.
The document is addressed to the beneficiary by a Bank on request by an applicant. The letter clarifies that a certain sum is due under the Letter of Credit and asks that payment should be made to the account as specified by the Letter of Credit.
This document should be carefully read by the Issuing Bank and the Beneficiary. Both the Bank and Beneficiary should sign and return a copy, and once signed, both parties should get a copy. To avoid any future disputes, both parties may wish to have their signatures witnessed. If either party wishes to amend the agreement in the future, both parties should agree to do so, and the original agreement and amendments should be recorded in writing and signed by both parties.
Information such as the sum due under the Letter of Credit, the relevant documents as set out in the Letter of Credit, the expiry date of the Letter of Credit and the Beneficiary's account number should be included.
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