Document background
The Evergreen Letter of Credit serves as a crucial financial instrument in international trade and commercial transactions under New Zealand law. It is particularly valuable when parties require a long-term, automatically renewing payment guarantee without the administrative burden of periodic manual renewals. This document type combines elements of traditional letters of credit with an automatic extension mechanism, providing continued validity unless specific notice is given to terminate. It must comply with New Zealand banking regulations, the Contract and Commercial Law Act 2017, and typically incorporates UCP 600 rules. The instrument is commonly used in ongoing supply relationships, long-term construction projects, or recurring international trade transactions where consistent payment security is required. The automatic renewal feature distinguishes it from standard letters of credit, making it especially suitable for established business relationships requiring sustained financial guarantees.
