Usance Letter Of Credit for Philippines

Usance Letter Of Credit Template for Philippines

A Usance Letter of Credit is a specialized banking instrument governed by Philippine banking laws and international trade regulations, particularly the UCP 600. This document serves as a deferred payment commitment issued by a bank on behalf of an importer (applicant) to pay the exporter (beneficiary) a specified amount at a predetermined future date, typically after the presentation of compliant documents. Under Philippine jurisdiction, these instruments are regulated by the Bangko Sentral ng Pilipinas and must comply with both local banking regulations and international trade practices.

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What is a Usance Letter Of Credit?

The Usance Letter of Credit is a fundamental trade finance instrument utilized in international commerce when deferred payment terms are required. This document type is particularly relevant in the Philippine context, where it must comply with the General Banking Law of 2000 and BSP regulations while adhering to international standards like UCP 600. It serves as a secure method of payment in international trade, providing the exporter with a bank's commitment to pay at a future date while giving the importer time to generate funds from the sale of goods. The document includes specific terms regarding payment period, document requirements, and conditions that must be met before payment is released. It's commonly used in situations where the buyer needs extended payment terms but the seller requires bank assurance of payment.

What sections should be included in a Usance Letter Of Credit?

1. Letter Details and Reference: Basic information including LC number, date of issuance, and expiry date

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

3. Beneficiary Details: Full name and address of the party in whose favor the LC is issued

4. Issuing Bank Details: Name and address of the bank issuing the Letter of Credit

5. Credit Amount: Currency and amount of the Letter of Credit, including any tolerance levels

6. Usance Terms: Specific details of the deferred payment terms, including maturity date and calculation method

7. Available With/By: Details of where and how the credit is available (negotiation, acceptance, deferred payment)

8. Shipment Details: Information about ports of loading/discharge, latest shipment date, and partial shipments

9. Document Requirements: Comprehensive list of required documents for presentation

10. Special Conditions: Any additional terms, conditions, or requirements specific to this LC

11. Bank Charges: Allocation of banking charges between parties

What sections are optional to include in a Usance Letter Of Credit?

1. Advising Bank Details: Include when a separate advising bank is involved in the transaction

2. Transferability Clause: Include when the LC needs to be transferable to another beneficiary

3. Confirmation Instructions: Include when confirmation from another bank is required

4. Red Clause Provisions: Include when advance payment facilities are to be provided to the beneficiary

5. Green Clause Provisions: Include when storage facilities are required for the goods

6. Revolving Terms: Include when the LC is to operate on a revolving basis

What schedules should be included in a Usance Letter Of Credit?

1. Schedule A - Document Requirements: Detailed listing of all required documents and their specific requirements

2. Schedule B - Goods Description: Detailed description of the goods being traded, including specifications and quantities

3. Schedule C - Special Payment Terms: Detailed breakdown of the usance payment terms and calculations

4. Appendix 1 - UCP 600 Disclaimers: Standard disclaimers and provisions as per UCP 600

5. Appendix 2 - Presentation Schedule: Timeline and requirements for document presentation

6. Appendix 3 - Amendment Procedures: Procedures for requesting and processing amendments to the LC

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

Jurisdiction

Philippines

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Import/Export

Retail

Wholesale

Commodities Trading

Agriculture

Textile Industry

Electronics

Automotive

Mining and Resources

Consumer Goods

Relevant Teams

Trade Finance

International Banking

Credit Operations

Treasury

Documentary Credits

Risk Management

Compliance

Finance

Procurement

Supply Chain

Legal

Operations

Relevant Roles

Trade Finance Manager

International Banking Officer

Credit Manager

Import/Export Manager

Treasury Manager

Documentary Credits Specialist

Trade Operations Manager

Compliance Officer

Risk Manager

Chief Financial Officer

Finance Director

Banking Relationship Manager

Supply Chain Manager

Procurement Manager

International Trade Specialist

Industries
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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