Backstop Letter Of Credit Template for Canada

A Backstop Letter of Credit is utilized when parties require a secondary layer of payment security in addition to primary payment or performance obligations. This document type is particularly relevant in complex commercial transactions where multiple layers of security are needed. The Backstop Letter of Credit, governed by Canadian law, typically includes specific trigger events that allow the beneficiary to draw on the letter of credit if certain predetermined conditions occur, such as a default under the primary obligation. It contains detailed provisions regarding drawing conditions, documentary requirements, and presentation mechanics, all while ensuring compliance with Canadian banking regulations and international banking practices. This instrument is commonly used in project finance, large commercial transactions, and cross-border deals where Canadian entities are involved, providing an additional layer of security that can be drawn upon in specific circumstances.

1. Issuing Bank Details: Full name and contact information of the issuing bank

2. Beneficiary Information: Complete details of the beneficiary including full legal name and address

3. Reference Numbers: LC number and any other relevant reference numbers

4. Amount and Currency: Maximum drawing amount and currency specification

5. Expiry Date: Clear statement of the expiry date and place

6. Form of Drawing: Specific requirements for making a drawing under the LC

7. Backstop Trigger Events: Detailed conditions that trigger the right to draw under the backstop LC

8. Documentary Requirements: List of required documents for drawing and presentation requirements

9. Governing Law and Rules: Specification of applicable law and rules (e.g., UCP 600, ISP98)

10. Transfer Provisions: Whether and how the LC may be transferred