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.
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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
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
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
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