An Operative Letter of Credit is a fundamental instrument in international trade finance, particularly significant in Hong Kong's role as a global financial and trading hub. This document represents a bank's irrevocable commitment to pay a seller (beneficiary) on behalf of a buyer (applicant), subject to the presentation of compliant documents. When using this document type, parties must ensure compliance with Hong Kong banking regulations, the UCP 600 guidelines, and relevant local ordinances. The Letter of Credit includes crucial details such as payment terms, document requirements, shipping conditions, and validity periods. It is particularly valuable in situations where parties seek secure payment methods in cross-border transactions, minimizing risks for both buyers and sellers. The document's structure and content reflect both international banking practices and Hong Kong's legal framework, making it a robust instrument for trade finance.
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1. Letter Reference and Date: Unique reference number and issuance date of the Letter of Credit
2. Bank Information: Full details of the issuing bank including address and SWIFT code
3. Credit Type and Number: Specification of credit type (irrevocable) and reference number
4. Beneficiary Details: Complete name and address of the beneficiary (seller)
5. Applicant Details: Complete name and address of the applicant (buyer)
6. Currency and Amount: Currency and amount of the credit in both figures and words
7. Credit Availability: How and where the credit is available (payment, acceptance, negotiation)
8. Expiry Details: Expiry date and place of the credit
9. Shipment Terms: Latest shipment date and delivery terms
10. Document Requirements: List of required documents (commercial invoice, transport documents, etc.)
11. Goods Description: Detailed description of the goods/services being traded
12. Payment Terms: Specific conditions and timing of payment
13. Bank Charges: Allocation of banking charges between parties
1. Transferability Clause: Include when the credit needs to be transferable to another beneficiary
2. Revolving Terms: Include for revolving Letters of Credit specifying reinstatement conditions
3. Red Clause: Include when advance payment to the beneficiary is permitted
4. Green Clause: Include when storage of goods is involved with advance payment
5. Back-to-Back Provisions: Include when the credit supports a back-to-back arrangement
6. Partial Shipment Terms: Include when partial shipments are allowed or prohibited
7. Transhipment Terms: Include when specific transhipment conditions apply
8. Insurance Instructions: Include when specific insurance requirements need to be detailed
1. Document Checklist: Detailed checklist of required documents and their specifications
2. Technical Specifications: Detailed technical specifications of goods when applicable
3. Shipping Schedule: Detailed shipping timeline and requirements if complex delivery is involved
4. Price Schedule: Breakdown of prices if multiple items or deliveries are involved
5. Special Conditions Appendix: Any special conditions or requirements that are too detailed for the main body
6. Insurance Requirements: Detailed insurance requirements and specifications if applicable
Relevant legal definitions
Advising Bank
Applicant
Banking Day
Beneficiary
Bill of Exchange
Bill of Lading
Complying Presentation
Confirmation
Confirming Bank
Credit
Documents Required
Draft
Expiry Date
Honour
Issuing Bank
Latest Shipment Date
Negotiating Bank
Negotiation
Nominated Bank
Presentation
Reimbursing Bank
Shipping Documents
SWIFT
Trade Terms
Transport Documents
UCP 600
Unutilized Balance
Valid Claim
Waybill
Applicant
Banking Day
Beneficiary
Bill of Exchange
Bill of Lading
Complying Presentation
Confirmation
Confirming Bank
Credit
Documents Required
Draft
Expiry Date
Honour
Issuing Bank
Latest Shipment Date
Negotiating Bank
Negotiation
Nominated Bank
Presentation
Reimbursing Bank
Shipping Documents
SWIFT
Trade Terms
Transport Documents
UCP 600
Unutilized Balance
Valid Claim
Waybill
Clauses
Credit Amount
Availability
Expiry
Documentary Requirements
Payment Terms
Shipment Terms
Document Examination
Bank Charges
Assignment
Force Majeure
Governing Law
Jurisdiction
Amendments
Notices
Compliance
Anti-Money Laundering
Sanctions
Disclaimers
Default
Transferability
Presentation Terms
Reimbursement
Partial Shipments
Transhipment
Insurance
Bank Obligations
Discrepancies
Document Rejection
Indemnification
Availability
Expiry
Documentary Requirements
Payment Terms
Shipment Terms
Document Examination
Bank Charges
Assignment
Force Majeure
Governing Law
Jurisdiction
Amendments
Notices
Compliance
Anti-Money Laundering
Sanctions
Disclaimers
Default
Transferability
Presentation Terms
Reimbursement
Partial Shipments
Transhipment
Insurance
Bank Obligations
Discrepancies
Document Rejection
Indemnification
Relevant Industries
Banking and Financial Services
International Trade
Import/Export
Manufacturing
Commodities Trading
Retail
Wholesale
Logistics and Supply Chain
Maritime and Shipping
Agriculture and Food
Textiles and Garments
Electronics and Technology
Construction Materials
Relevant Teams
Trade Finance
International Banking
Documentary Credits
Compliance
Risk Management
Treasury
Operations
Legal
Commercial Banking
International Trade Operations
Credit Administration
Transaction Banking
Relevant Roles
Trade Finance Manager
International Trade Specialist
Documentary Credits Officer
Banking Operations Manager
Compliance Officer
Trade Finance Analyst
Letter of Credit Specialist
Treasury Manager
Import/Export Manager
Financial Controller
Trade Documentation Specialist
Credit Risk Manager
International Business Development Manager
Supply Chain Manager
Chief Financial Officer
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