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The document titled 'Letter of Credit' is a formal request for the issuance of a documentary credit by the issuing bank. It is an important document in international trade and finance, as it provides a guarantee of payment to the seller/exporter by the buyer/importer. The detailed description of the document can be divided into two parts: the entire document and each section.
In the entire document, the letter starts with a quote and utilisation request, followed by the current date and a salutation to the recipient. It then refers to a facility agreement dated the original agreement date and states that this is a utilisation request. The terms defined in the agreement have the same meaning in this utilisation request unless specified otherwise. The purpose of the utilisation request is to arrange for a documentary credit to be issued by the issuing bank on specific conditions.
The first section of the document provides the background information and context. It mentions the proposed utilisation date, the facility to be utilised (bank name and address), the requested amount, and the term of the utilization. It also refers to the specified terms and conditions in the letter of credit.
The second section confirms that the conditions in the agreement will be satisfied on the date of the utilisation request. It states that a copy of the proposed documentary credit is attached and emphasizes that the utilisation request is irrevocable. The letter ends with a closing salutation and the account holder's name.
Schedule 1 of the document requests the attachment of a proposed documentary credit. This schedule is an integral part of the letter of credit and provides additional details or instructions related to the documentary credit.
Overall, the 'Letter of Credit' document serves as a formal request for the issuance of a documentary credit, ensuring payment security and facilitating international trade transactions.
Guidance on how to use the 'Letter of Credit' document:
1. Start by quoting the document and stating the utilisation request. Include the current date and address the recipient with a proper salutation.
2. Refer to the relevant facility agreement and clarify that this is a utilisation request. Ensure that the terms defined in the agreement are consistent throughout the document.
3. Provide the necessary details for the issuance of the documentary credit, such as the proposed utilisation date, the bank's name and address, the requested amount, and the term of the utilization. Specify the terms and conditions that should be included in the letter of credit.
4. Confirm that all conditions in the agreement will be satisfied on the date of the utilisation request. Attach a copy of the proposed documentary credit to support the request.
5. Emphasize the irrevocable nature of the utilisation request and conclude the letter with a closing salutation and the account holder's name.
6. In Schedule 1, explicitly request the attachment of a proposed documentary credit to provide additional details or instructions related to the credit.
By following these steps, the 'Letter of Credit' document can be effectively used to request the issuance of a documentary credit, ensuring payment security and facilitating international trade transactions.