Restricted Letter Of Credit for United Arab Emirates

Restricted Letter Of Credit Template for United Arab Emirates

A Restricted Letter of Credit is a specialized form of documentary credit governed by UAE law and international banking practices, particularly the UCP 600. This document represents a bank's conditional payment undertaking, with specific restrictions on which banks can negotiate or pay against the credit. Operating under UAE jurisdiction, it provides enhanced security for international trade transactions by limiting the number of banks authorized to handle the credit, thereby reducing risks of fraud and unauthorized payments. The document incorporates UAE Central Bank regulations and local commercial law requirements while maintaining alignment with international banking standards.

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What is a Restricted Letter Of Credit?

The Restricted Letter of Credit serves as a crucial trade finance instrument in the UAE's international commerce landscape. It is specifically designed for situations where parties seek enhanced security by limiting the banks authorized to handle the credit. This document type is commonly used when there are concerns about documentary fraud or when parties want to ensure that only specific, trusted banking institutions process the transaction. The Restricted Letter of Credit must comply with UAE Federal Law No. 18 of 1993 (Commercial Transactions Law) and UAE Central Bank regulations, while also adhering to international UCP 600 guidelines. It includes detailed specifications of authorized banks, payment terms, document requirements, and relevant restrictions, providing a secure framework for international trade transactions while maintaining compliance with UAE banking regulations.

What sections should be included in a Restricted Letter Of Credit?

1. Bank Details and Reference Number: Issuing bank's details, LC reference number, and date of issuance

2. Beneficiary Information: Complete details of the beneficiary including name, address, and banking information

3. Applicant Information: Complete details of the applicant (buyer) including name, address, and contact information

4. Credit Amount and Currency: Specification of the LC amount and currency, including any tolerance levels if applicable

5. Form of Credit: Specification that this is a restricted letter of credit and its specific form (e.g., irrevocable)

6. Restriction Specifications: Clear detailed statement of the restrictions applied to the LC, including nominated bank limitations

7. Expiry Details: Expiry date and place of the letter of credit

8. Payment Terms: Specific terms of payment including timing and method

9. Required Documents: Comprehensive list of documents required for presentation

10. Presentation Period: Time period within which documents must be presented

11. Governing Law and Jurisdiction: Statement of UAE law governance and jurisdiction

What sections are optional to include in a Restricted Letter Of Credit?

1. Partial Shipments/Drawings: Include when specific rules about partial shipments or drawings need to be stated

2. Transhipment Terms: Include when specific transhipment restrictions or permissions need to be detailed

3. Additional Conditions: Include when there are special conditions or requirements beyond standard LC terms

4. Insurance Requirements: Include when specific insurance requirements need to be detailed

5. Special Instructions for Nominated Bank: Include when specific instructions for the nominated bank need to be provided

6. Transfer Restrictions: Include when specific transfer restrictions beyond standard restrictions need to be detailed

What schedules should be included in a Restricted Letter Of Credit?

1. Schedule A - Document Requirements: Detailed checklist of required documents and their specific requirements

2. Schedule B - Goods Description: Detailed description of the goods or services covered by the LC

3. Schedule C - Payment Schedule: If applicable, detailed schedule of payments or drawings

4. Appendix 1 - Standard Banking Forms: Standard forms required for document presentation

5. Appendix 2 - Shipping Terms: Detailed shipping requirements and specifications if applicable

6. Appendix 3 - Restriction Details: Comprehensive details of all restrictions and their implications

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

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Oil and Gas

Construction

Retail

Commodities Trading

Logistics and Supply Chain

Import/Export

Maritime and Shipping

Agriculture

Telecommunications

Relevant Teams

Trade Finance

International Banking

Corporate Banking

Legal

Compliance

Risk Management

Treasury Operations

Documentary Credits

Trade Operations

Banking Relations

Financial Control

Relevant Roles

Trade Finance Manager

Documentary Credits Officer

International Banking Officer

Compliance Officer

Treasury Manager

Import/Export Manager

Trade Operations Manager

Letter of Credit Specialist

Banking Relations Manager

Chief Financial Officer

Financial Controller

Risk Management Officer

Trade Finance Analyst

Corporate Banking Manager

Legal Counsel

Credit Risk Officer

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Application Letter For Lc

A UAE-compliant formal application to a bank requesting the issuance of a Letter of Credit, governed by UAE banking regulations and international UCP 600 rules.

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What is a Restricted Letter Of Credit?

What sections should be included in a Restricted Letter Of Credit?

What sections are optional to include in a Restricted Letter Of Credit?

What schedules should be included in a Restricted Letter Of Credit?

Authors

Alex Denne

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