Document background
A Domestic Letter of Credit is primarily used in Hong Kong for local trade transactions where parties seek additional payment security and formal banking intermediation. This document type is particularly relevant when dealing with high-value transactions or when parties lack an established trading relationship. The Domestic Letter of Credit provides a structured framework that outlines payment terms, document requirements, and compliance conditions, offering protection to both buyer and seller. It operates under Hong Kong jurisdiction and must comply with local banking regulations while typically incorporating UCP 600 principles. The document is especially valuable in scenarios where sellers require payment assurance before shipping goods, or buyers need to demonstrate financial credibility through bank support.
