A Performance Letter of Credit is a crucial financial instrument used in commercial transactions and projects where one party needs assurance of the other party's performance obligations. This document, governed by German law, provides security in the form of an independent bank undertaking to pay a specified amount upon documented default of the underlying performance obligations. The Performance Letter of Credit is particularly valuable in international transactions and large-scale projects where parties may not have established business relationships or where significant performance risks need to be mitigated. It operates under German legal framework while typically incorporating UCP 600 rules, making it a hybrid instrument that combines local legal certainty with internationally recognized banking practices. The document specifies the conditions for drawing, required documentation, validity period, and the independent nature of the bank's obligation, separate from the underlying commercial contract.

1. Letter Reference and Date: Unique reference number and date of issuance of the Letter of Credit

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

3. Beneficiary Details: Full name and address of the beneficiary (typically the buyer/employer)

4. Applicant Details: Full name and address of the applicant (typically the seller/contractor)

5. Credit Amount and Currency: Specific amount and currency of the Performance Letter of Credit

6. Form of Credit: Specification that this is an irrevocable Performance Letter of Credit

7. Underlying Contract Reference: Reference to the main contract being secured by this Performance Letter of Credit

8. Performance Obligations: Description of the performance obligations being secured

9. Drawing Conditions: Specific conditions and documentation required for drawing on the credit

10. Expiry Date and Place: Clear statement of when and where the credit expires

11. Governing Law Statement: Explicit statement that German law governs the Letter of Credit

12. UCP 600 Reference: Statement incorporating UCP 600 rules