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Document Description
The Standby Letter of Credit is a document that serves as a security measure for the obligations of the issuing bank under a specific agreement. It is addressed to the beneficiary and establishes an irrevocable standby letter of credit in their favor. The maximum amount of the credit is specified, and it is payable upon the beneficiary's demand via facsimile, tested telex, or authenticated swift.
The Standby Letter of Credit is effective from a specified effective date and expires on a specified expiry date. The issuing bank agrees to honor all demands presented in conformity with the terms of the letter of credit and will remit the payment within a specified number of banking days upon receipt of documents that comply with the credit terms and conditions.
Partial payments and multiple presentations are allowed under this letter of credit. The applicant is responsible for all bank charges incurred. The issuing bank confirms that all necessary authorizations and approvals have been obtained to issue and perform this standby letter of credit, and they have complied with all applicable laws and regulations.
The Standby Letter of Credit is subject to the International Standby Practices 98, as published by the International Chamber of Commerce. It is governed by the laws of the jurisdiction country and the parties agree to submit to the non-exclusive jurisdiction of the courts of that country.
How to use this document?
1. Specify the issuing bank name and the beneficiary's name in the letter of credit.
2. Include a clear introduction addressing the recipient as 'Dear Sirs/Madams'.
3. State the irrevocable standby letter of credit number for reference.
4. Establish the maximum amount of the credit as security for the issuing bank's obligations under a specific agreement.
5. Specify the methods through which the beneficiary can make a demand for payment.
6. Provide the effective date and expiry date of the letter of credit.
7. Assure the beneficiary that all demands presented in conformity with the terms of the letter of credit will be honored.
8. Mention the timeframe within which the issuing bank will remit payment upon receipt of compliant documents.
9. Allow for partial payments and multiple presentations.
10. Clarify that all bank charges will be borne by the applicant.
11. Confirm that all necessary authorizations and approvals have been obtained.
12. State that the letter of credit is subject to the International Standby Practices 98.
13. Specify the governing law and jurisdiction of the letter of credit.
14. Conclude the letter with a formal closing and the name of the issuing bank.
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