Divisible Letter Of Credit for Germany

Divisible Letter Of Credit Template for Germany

A Divisible Letter of Credit document under German law (governed by the Handelsgesetzbuch and relevant EU regulations) is a specialized financial instrument that allows for multiple partial drawings against a total credit amount. It provides a secure method of payment in international trade transactions where goods or services are delivered in installments. The document incorporates UCP 600 guidelines while complying with German banking regulations and EU financial directives, offering detailed terms for partial shipments, document presentations, and payment conditions.

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What is a Divisible Letter Of Credit?

The Divisible Letter of Credit is a sophisticated financial instrument used primarily in international trade transactions where partial shipments and corresponding partial payments are necessary. This document type is particularly relevant when dealing with large-scale transactions under German jurisdiction, where the total contract value needs to be divided into multiple drawings. It combines the international standards of UCP 600 with German commercial law (Handelsgesetzbuch) and EU banking regulations, providing a secure payment mechanism for both importers and exporters. The document specifies conditions for partial drawings, required documentation for each drawing, and payment terms, while ensuring compliance with German banking regulations and international trade practices.

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

1. Issuing Bank Details: Complete details of the issuing bank including name, address, SWIFT code, and contact information

2. Letter of Credit Number: Unique identification number for the letter of credit

3. Date of Issue: The date when the letter of credit is issued

4. Beneficiary Information: Complete details of the beneficiary including name, address, and account information

5. Applicant Information: Complete details of the applicant requesting the letter of credit

6. Currency and Amount: Specification of the currency and total amount of the letter of credit

7. Division Structure: Detailed explanation of how the letter of credit can be divided, including minimum drawing amounts and conditions

8. Expiry Date: Date and place of expiry for the letter of credit

9. Presentation Terms: Specifications for where and how documents should be presented

10. Required Documents: List of all documents required for each drawing under the letter of credit

11. Payment Terms: Conditions and timing of payment upon document presentation

12. Partial Shipments: Specifications regarding partial shipments and drawings

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

1. Transferability Clause: Include when the letter of credit needs to be transferable to other beneficiaries

2. Revolving Terms: Include when the letter of credit needs to automatically reinstate after each drawing

3. Red Clause: Include when advance payments are permitted before document presentation

4. Back-to-Back Provisions: Include when the letter of credit may be used as collateral for another letter of credit

5. Special Instructions: Include when there are specific requirements for document preparation or presentation

6. Force Majeure Clause: Include when specific force majeure provisions are required beyond standard UCP terms

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

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

1. Schedule A - Drawing Schedule: Detailed schedule showing the permitted drawing amounts, dates, and conditions

2. Schedule B - Document Requirements: Detailed specifications for each required document including format and content

3. Schedule C - Division Terms: Detailed terms and conditions for dividing the letter of credit

4. Appendix 1 - Form of Draft: Template for the bill of exchange to be presented with each drawing

5. Appendix 2 - Form of Transfer Request: Standard form for requesting transfer of the letter of credit (if transferable)

6. Appendix 3 - Document Presentation Checklist: Checklist for ensuring complete and correct document presentation

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

Germany

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Commodities Trading

Import/Export

Shipping and Logistics

Agriculture

Energy

Mining

Construction

Heavy Industry

Relevant Teams

Trade Finance

International Banking

Legal

Compliance

Treasury

Risk Management

Operations

Documentary Credits

Import Operations

Export Operations

Financial Control

Relevant Roles

Trade Finance Manager

International Trade Specialist

Banking Operations Manager

Letter of Credit Specialist

Financial Controller

Treasury Manager

Compliance Officer

Documentary Credits Manager

Import Manager

Export Manager

Trade Operations Officer

Risk Manager

Banking Relationship Manager

Chief Financial Officer

International Business Development 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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