Lc Without Recourse for Canada

Lc Without Recourse Template for Canada

A Letter of Credit Without Recourse is a specialized banking instrument used in Canadian and international trade transactions, governed by Canadian federal banking laws and international banking practices (UCP 600). This document represents an irrevocable undertaking by a bank to pay the beneficiary a specified amount upon presentation of compliant documents, with the unique feature that the beneficiary is freed from future liability once the documents are accepted. It incorporates specific Canadian regulatory requirements while maintaining alignment with international banking standards, making it particularly useful for cross-border trade transactions where the beneficiary seeks to eliminate post-payment risks.

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What is a Lc Without Recourse?

The LC Without Recourse is a specialized form of documentary credit used in international trade transactions where the beneficiary requires protection from future claims or liabilities. This document type is particularly relevant in Canadian trade finance, operating under the framework of the Canadian Bank Act and international banking practices. It provides an irrevocable commitment from the issuing bank to pay, while explicitly stating that once payment is made against compliant documents, the beneficiary cannot be held liable for future disputes or defaults. The without recourse nature makes it especially valuable for exporters who want to eliminate post-transaction risks, while still providing security to importers through document verification requirements. Common scenarios for its use include one-off international sales, transactions with new trading partners, or deals in high-risk markets where the exporter wants to limit future exposure.

What sections should be included in a Lc Without Recourse?

1. Letter of Credit Number and Date: Unique identification number and issuance date of the LC

2. Issuing Bank Details: Complete name and address of the issuing bank

3. Beneficiary Details: Full name and address of the beneficiary

4. Applicant Details: Full name and address of the applicant requesting the LC

5. Amount and Currency: Credit amount and currency specification

6. Expiry Date and Place: Clear statement of when and where the LC expires

7. Without Recourse Declaration: Explicit statement that the LC is without recourse to the beneficiary

8. Available With/By: Specification of how and where the credit is available

9. Required Documents: List of documents required for presentation

10. Shipment Terms: Details of shipment, including latest shipment date if applicable

11. Payment Terms: Specification of payment timing and conditions

What sections are optional to include in a Lc Without Recourse?

1. Transferability Clause: Include when the LC needs to be transferable to another beneficiary

2. Revolving Terms: Include for revolving LCs, specifying reinstatement conditions

3. Red Clause: Include when advance payment provisions are required

4. Green Clause: Include when warehouse storage provisions are needed

5. Partial Shipment/Drawing Terms: Include when partial shipments or drawings are permitted

6. Back-to-Back Provisions: Include for back-to-back LC arrangements

7. Confirmation Instructions: Include when confirmation by another bank is required

What schedules should be included in a Lc Without Recourse?

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 - Special Payment Conditions: Any special conditions or requirements for payment

4. Appendix 1 - UCP 600 Compliance: Specific references to applicable UCP 600 articles

5. Appendix 2 - Bank Forms: Standard forms required by the issuing bank for drawings

6. Appendix 3 - Amendment Template: Template for future amendments to the LC if needed

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
Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Retail

Commodities Trading

Agriculture

Energy

Mining

Telecommunications

Automotive

Pharmaceuticals

Technology

Shipping and Logistics

Relevant Teams

Trade Finance

International Banking

Legal

Compliance

Risk Management

Treasury

Commercial Banking

Trade Operations

Documentary Credits

Global Transaction Services

Relevant Roles

Trade Finance Manager

International Banking Officer

Documentary Credits Specialist

Export Finance Manager

Trade Operations Manager

Compliance Officer

Legal Counsel

Credit Risk Manager

Treasury Manager

Commercial Banking Officer

International Trade Specialist

Finance Director

Chief Financial Officer

Import/Export Coordinator

Documentary Collections Officer

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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