Export Lc Discounting for Canada

Export Lc Discounting Template for Canada

This is a specialized financial agreement governed by Canadian law that enables exporters to obtain immediate financing by discounting their export letters of credit with a financial institution. The agreement sets out the terms and conditions under which the financial institution will purchase the letter of credit at a discount, providing the exporter with immediate access to funds rather than waiting for the maturity of the LC. It includes detailed provisions for pricing, risk allocation, documentation requirements, and compliance with Canadian banking and international trade regulations.

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What is a Export Lc Discounting?

Export LC Discounting agreements are essential financial instruments in Canadian international trade, particularly for companies seeking to optimize their working capital management. This document is utilized when an exporter holds a letter of credit from an international buyer's bank and wishes to receive immediate payment rather than waiting for the LC's maturity date. The agreement, governed by Canadian federal law and applicable provincial regulations, establishes the framework for discounting these LCs, including the discount rate, processing requirements, risk allocation, and compliance obligations. It incorporates requirements from Canadian banking regulations, international trade laws, and anti-money laundering provisions, while also aligning with international banking practices such as UCP 600. The document is particularly relevant in scenarios where exporters need to maintain consistent cash flow while engaging in international trade transactions.

What sections should be included in a Export Lc Discounting?

1. Parties: Identification of the financial institution (discounter) and the exporter (seller)

2. Background: Context of the agreement, including reference to the underlying export transaction and letter of credit

3. Definitions: Key terms used throughout the agreement including 'Letter of Credit', 'Discounting Rate', 'Documents', etc.

4. Scope of Discounting Facility: Details of the discounting facility including limits, eligible LCs, and basic terms

5. Discounting Process: Procedures for submission of LCs for discounting and execution of discounting

6. Pricing and Fees: Discounting rate calculation, fees, charges and payment terms

7. Conditions Precedent: Conditions that must be satisfied before discounting can occur

8. Representations and Warranties: Standard and specific representations by the exporter regarding their business and the underlying transaction

9. Covenants: Ongoing obligations of the exporter during the facility period

10. Documentation Requirements: Required documents for discounting and their format

11. Payment and Settlement: Process for payments, settlements and handling of proceeds

12. Events of Default: Circumstances constituting default and consequences

13. Indemnification: Exporter's obligations to indemnify the financial institution

14. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

15. Notices: Process for giving notices under the agreement

16. Miscellaneous: Standard boilerplate provisions including amendments, assignments, and severability

What sections are optional to include in a Export Lc Discounting?

1. Security Arrangements: Required when additional security or collateral is being provided for the facility

2. Insurance: Specific insurance requirements, needed when insurance is part of the risk mitigation strategy

3. Sanctions and Export Control Compliance: Detailed compliance requirements for transactions involving sensitive jurisdictions or goods

4. Foreign Exchange Provisions: Required when LC and settlement currencies are different

5. Syndication Rights: Included when the financial institution may want to syndicate the facility

6. Electronic Documentation: Specific provisions for electronic submission and processing of documents

7. Force Majeure: Detailed force majeure provisions, particularly relevant for international transactions

What schedules should be included in a Export Lc Discounting?

1. Schedule 1 - Facility Limits and Pricing: Detailed breakdown of facility limits, sub-limits, and pricing structure

2. Schedule 2 - Form of Discounting Request: Standard form for requesting discounting of an LC

3. Schedule 3 - Required Documents Checklist: Detailed list of required documents for each discounting request

4. Schedule 4 - Authorized Signatories: List of persons authorized to submit discounting requests and execute documents

5. Schedule 5 - Compliance Certificates: Forms of various compliance certificates required under the agreement

6. Appendix A - Standard Operating Procedures: Detailed procedures for submission, processing, and settlement of discounting requests

7. Appendix B - Fee Schedule: Detailed breakdown of all applicable 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

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Manufacturing

Agriculture and Food Products

Mining and Natural Resources

Automotive

Aerospace and Defense

Chemical and Pharmaceuticals

Technology and Electronics

Textile and Apparel

Heavy Equipment

Consumer Goods

Relevant Teams

Legal

Finance

Treasury

International Trade Operations

Risk Management

Compliance

Trade Finance

Credit Administration

Sales

Documentation

Relevant Roles

Trade Finance Manager

Export Finance Director

Chief Financial Officer

Treasury Manager

International Business Development Manager

Trade Operations Manager

Compliance Officer

Legal Counsel

Credit Risk Manager

Documentary Credits Specialist

Export Sales Manager

Finance Controller

Banking Relationship Manager

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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