Confirmed And Unconfirmed Letter Of Credit for United Arab Emirates

Confirmed And Unconfirmed Letter Of Credit Template for United Arab Emirates

A Letter of Credit document governed by UAE law is a formal undertaking by a bank to make payment to a beneficiary upon presentation of compliant documents. This instrument, regulated under UAE Federal Law No. 18 of 1993 and incorporating UCP 600 principles, provides security in international trade transactions by guaranteeing payment subject to specific conditions. The document details the terms, conditions, and documentation requirements for payment, while adhering to both UAE banking regulations and Sharia principles where applicable. It serves as a crucial tool in UAE's international trade framework, offering protection to both importers and exporters while ensuring compliance with local and international banking standards.

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What is a Confirmed And Unconfirmed Letter Of Credit?

The Confirmed And Unconfirmed Letter of Credit is a vital trade finance instrument in the UAE's commercial landscape, essential for facilitating secure international trade transactions. This document type comes in two main variations: confirmed, where a second bank adds its guarantee to the issuing bank's commitment, and unconfirmed, where only the issuing bank's commitment exists. Used extensively in the UAE's trading environment, it provides a secure payment mechanism for international transactions while complying with UAE Federal Law No. 18 of 1993, UAE Central Bank regulations, and international banking practices (UCP 600). The document is particularly crucial in the UAE's context as a global trading hub, where it helps mitigate risks in cross-border transactions while adhering to local banking regulations and, where required, Sharia principles. It includes detailed specifications for payment conditions, document requirements, and banking obligations, serving as a cornerstone document in international trade finance.

What sections should be included in a Confirmed And Unconfirmed Letter Of Credit?

1. Letter Reference and Date: Unique reference number and date of issuance of the Letter of Credit

2. Bank Details: Full details of the issuing bank, and if confirmed, the confirming bank

3. Applicant Details: Complete information of the buyer/applicant requesting the Letter of Credit

4. Beneficiary Details: Complete information of the seller/beneficiary of the Letter of Credit

5. Credit Amount and Currency: Specified amount and currency of the Letter of Credit, including any tolerance levels

6. Expiry Details: Expiry date and place for presentation of documents

7. Form of Credit: Specification that this is an irrevocable Letter of Credit (per UCP 600)

8. Available With/By: Specifications of how and where the credit is available (payment, acceptance, or negotiation)

9. Shipment Terms: Latest shipment date and delivery terms (including Incoterms)

10. Document Requirements: Detailed list of required documents for presentation

11. Special Conditions: Any specific conditions or terms applicable to this Letter of Credit

12. Bank Charges: Allocation of banking charges between parties

13. Confirmation Instructions: Instructions regarding confirmation (if applicable)

14. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant jurisdiction

What sections are optional to include in a Confirmed And Unconfirmed Letter Of Credit?

1. Partial Shipments: Include when specifying whether partial shipments are allowed or prohibited

2. Transhipment: Include when specifying whether transhipment is allowed or prohibited

3. Transfer Conditions: Include when the Letter of Credit is transferable

4. Red Clause Provisions: Include when advance payment to the beneficiary is permitted

5. Green Clause Provisions: Include when storage-related advances are permitted

6. Revolving Credit Terms: Include when the Letter of Credit is revolving

7. Back-to-Back Provisions: Include when the Letter of Credit is part of a back-to-back arrangement

8. Islamic Banking Compliance: Include when the Letter of Credit needs to comply with Islamic banking principles

What schedules should be included in a Confirmed And Unconfirmed Letter Of Credit?

1. Schedule A - Commercial Invoice Requirements: Detailed specifications for the format and content of commercial invoices

2. Schedule B - Transport Document Requirements: Detailed specifications for acceptable transport documents

3. Schedule C - Insurance Document Requirements: Specifications for required insurance documentation

4. Schedule D - Product Specifications: Detailed description of goods or services covered by the Letter of Credit

5. Appendix 1 - UCP 600 Incorporation: Standard terms incorporating UCP 600 rules

6. Appendix 2 - Bank's Standard Terms: Standard terms and conditions of the issuing bank

7. Appendix 3 - Fee Schedule: Detailed breakdown of all applicable banking fees and charges

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

International Trade

Import/Export

Manufacturing

Retail

Commodities Trading

Oil and Gas

Construction

Logistics and Supply Chain

Agriculture

Textile Industry

Electronics and Technology

Automotive Industry

Healthcare and Pharmaceuticals

Relevant Teams

Trade Finance

International Banking

Commercial Banking

Risk Management

Compliance

Legal

Treasury

Operations

Documentary Credits

International Trade

Supply Chain

Finance

Credit Analysis

Trade Operations

Relevant Roles

Trade Finance Manager

International Business Director

Import/Export Manager

Treasury Manager

Finance Director

Compliance Officer

Documentary Credit Specialist

Banking Operations Manager

Risk Manager

Commercial Banking Officer

Trade Operations Analyst

Letter of Credit Specialist

Chief Financial Officer

Supply Chain Manager

International Trade Specialist

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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