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Clean Letter Of Credit

Clean Letter Of Credit Template for New Zealand

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Key Requirements PROMPT example:

Clean Letter Of Credit

"I need a Clean Letter of Credit for NZD 500,000 to be issued by ANZ Bank New Zealand to secure payment for our Australian supplier, expiring March 15, 2025, with payment available at sight upon simple demand."

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Document background
The Clean Letter of Credit serves as a fundamental instrument in international trade finance, providing a secure payment mechanism with simplified documentation requirements. Unlike commercial Letters of Credit, a Clean Letter of Credit requires only a draft or demand for payment without supporting commercial documents, making it particularly attractive for certain types of transactions where trust is established but payment security is still desired. This document, governed by New Zealand law and international banking practices (UCP 600), is commonly used in various scenarios including advance payments, performance guarantees, and financial standby arrangements. The Clean Letter of Credit combines the security of bank-backed payment with operational simplicity, making it an efficient tool for international business transactions while ensuring compliance with New Zealand banking and commercial regulations.
Suggested Sections

1. Letter Header: Bank's letterhead, reference number, date, and type of credit (Irrevocable Clean Letter of Credit)

2. Beneficiary Details: Full name and address of the beneficiary to whom the credit is issued

3. Applicant Details: Full name and address of the party requesting the Letter of Credit

4. Credit Amount: The currency and amount of the credit, both in figures and words

5. Expiry Details: Expiry date and place for presentation of documents

6. Payment Terms: Specification of how and when payment will be made (at sight, deferred payment, etc.)

7. Drawing Terms: Conditions under which the beneficiary can draw on the credit

8. Presentation Requirements: Basic requirements for presentation of the draft/demand for payment

9. Bank Details: Details of the issuing bank and any nominated banks

10. Governing Law Statement: Confirmation that the credit is subject to UCP 600 and New Zealand law

11. Authentication: Authorized signatures and any authentication codes or references

Optional Sections

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

2. Revolving Terms: Include when the credit is revolving rather than single-use

3. Confirmation Instructions: Include when confirmation by another bank is requested/required

4. Special Payment Conditions: Include when there are specific conditions for payment beyond standard terms

5. Assignment of Proceeds: Include when rights to proceeds may be assigned to a third party

6. Force Majeure Provisions: Include when specific force majeure terms beyond UCP 600 are required

7. Partial Shipment/Drawing Terms: Include when partial drawings or multiple presentations are allowed

Suggested Schedules

1. Draft/Demand Format: Prescribed format for the draft or demand for payment

2. Authorized Signatories: List of authorized signatories and specimen signatures if required

3. Fee Schedule: Detailed breakdown of banking charges and fees

4. SWIFT/Electronic Communication Protocols: Specific requirements for electronic communications and SWIFT messages

5. Amendment Procedures: Standard procedures for requesting and processing amendments to the credit

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking and Financial Services

International Trade

Import/Export

Manufacturing

Wholesale Trade

Retail

Commodities Trading

Shipping and Logistics

Agriculture

Mining and Resources

Energy

Relevant Teams

Trade Finance

International Banking

Treasury

Credit Operations

Risk Management

Compliance

Legal

Finance

International Operations

Documentary Credits

Global Transaction Services

Customer Relations

Relevant Roles

Trade Finance Manager

International Banking Officer

Credit Manager

Treasury Manager

Financial Controller

Import/Export Manager

Trade Operations Manager

Relationship Manager

Risk Manager

Compliance Officer

Chief Financial Officer

Documentary Credits Specialist

Banking Operations Manager

International Business Development Manager

Industries
Contract and Commercial Law Act 2017: This Act provides the fundamental framework for contract formation, validity, and enforcement in New Zealand, which is essential for Letters of Credit as they are contractual instruments.
Reserve Bank of New Zealand Act 2021: Governs banking operations and financial system regulation in New Zealand, including oversight of banking institutions that issue Letters of Credit.
Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Crucial for ensuring compliance with financial transaction regulations and due diligence requirements when issuing Letters of Credit.
UCP 600 (Uniform Customs and Practice for Documentary Credits): While not legislation per se, these ICC rules are universally recognized and typically incorporated into Letters of Credit in New Zealand and internationally.
Electronic Transactions Act 2002: Governs electronic transactions and digital signatures, relevant for modern Letters of Credit that may be processed electronically.
Personal Property Securities Act 1999: May be relevant when Letters of Credit are used as security instruments or in connection with secured transactions.
Fair Trading Act 1986: Ensures fair trading practices and prohibits misleading conduct in trade, which applies to all commercial transactions including Letters of Credit.
Customs and Excise Act 2018: Relevant when Letters of Credit are used in international trade transactions involving imports or exports.
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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