Standby Letter of Credit

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 document starts by stating the issuing bank's name and the beneficiary's name. It then addresses the beneficiary as 'dear sirs/madams' and provides the details of the standby letter of credit.

 

The standby letter of credit is assigned a unique identification number, referred to as the 'SBLC number.' It is established at the request and for the account of the applicant, who is also mentioned in the document. The purpose of the standby letter of credit is to provide security for the issuing bank's obligations under a specific agreement, which is referred to as the 'agreement name' and is dated the 'original agreement date.'

 

The standby letter of credit is payable upon the beneficiary's demand, which can be made via facsimile, tested telex, or authenticated swift. The payment is made up to the maximum amount specified in the document. The effective date of the standby letter of credit is mentioned, as well as the expiry date, which is the date when the document expires.

 

The issuing bank agrees to honor all demands presented in conformity with the terms of the standby letter of credit. The payment will be remitted within a specific number of banking days upon receipt of documents that comply with the credit terms and conditions listed. The document allows for partial payments and multiple presentations.

 

The document states that all bank charges are to be borne by the applicant. It also mentions that the standby letter of credit is subject to the International Standby Practices 98, which is a publication by the International Chamber of Commerce. The governing law for the document is the law of the jurisdiction state, and the issuing bank agrees to submit to the non-exclusive jurisdiction of the courts of the jurisdiction state.

 

Overall, the Standby Letter of Credit is a crucial document that provides security for the obligations of the issuing bank under a specific agreement. It outlines the terms and conditions for payment and ensures that the beneficiary's demands will be honored.

How to use this document?

1. Enter the issuing bank's name and the beneficiary's name in the document. This ensures that both parties are clearly identified.

2. Specify the unique identification number for the standby letter of credit, referred to as the 'SBLC number.'

3. Mention the applicant's name and establish the standby letter of credit in their favor. This provides security for the issuing bank's obligations under a specific agreement.

4. Clearly state the purpose of the standby letter of credit and the details of the agreement, including the 'agreement name' and the 'original agreement date.'

5. Specify the methods through which the beneficiary can make a demand for payment, such as facsimile, tested telex, or authenticated swift.

6. Clearly state the maximum amount up to which the standby letter of credit is payable.

7. Mention the effective date and the expiry date of the standby letter of credit.

8. Agree to honor all demands presented in conformity with the terms of the standby letter of credit.

9. Specify the number of banking days within which the payment will be remitted upon receipt of compliant documents.

10. Allow for partial payments and multiple presentations.

11. Clarify that all bank charges are to be borne by the applicant.

12. State that the standby letter of credit is subject to the International Standby Practices 98.

13. Specify the governing law for the document and agree to submit to the non-exclusive jurisdiction of the courts.

By following these steps, you can effectively use the Standby Letter of Credit document and ensure that both parties understand their rights and obligations.