Legal Templates
Deferred Lc

Deferred Lc for South Africa

Deferred Lc Template for South Africa

This document establishes the terms and conditions for a Deferred Letter of Credit under South African law, incorporating international banking practices and UCP 600 guidelines. It outlines the arrangement whereby a bank commits to pay a seller at a specified future date, subject to the presentation of compliant documents, while providing the buyer with an extended payment period. The document addresses specific requirements under South African banking regulations, foreign exchange controls, and includes provisions for documentary requirements, payment terms, and bank obligations, making it suitable for international trade transactions where deferred payment is required.

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What is a Deferred Lc?

The Deferred LC agreement is utilized in international trade transactions where buyers require extended payment terms while ensuring sellers receive a secure payment commitment. This document type is particularly relevant in South Africa's cross-border trade environment, where it must comply with both local banking regulations and international standards. The Deferred LC structure provides importers with financing flexibility while offering exporters bank-backed payment security. It includes comprehensive details about document requirements, payment terms, bank obligations, and compliance with South African foreign exchange controls. The agreement incorporates UCP 600 guidelines while addressing specific requirements of South African law, making it suitable for various international trade scenarios where deferred payment terms are necessary.

What sections should be included in a Deferred Lc?

1. Parties: Identification of all parties involved - Applicant, Beneficiary, Issuing Bank, and any Advising/Confirming Banks

2. Background: Context of the underlying transaction and purpose of the deferred LC

3. Definitions: Key terms used in the LC agreement including banking, trade, and technical terms

4. LC Amount and Currency: Specification of the credit amount and currency of payment

5. Validity and Expiry: Terms regarding LC validity period and expiry date

6. Payment Terms: Detailed deferred payment structure, including maturity period and calculation method

7. Documentary Requirements: List of required documents for LC presentation and compliance

8. Presentation Period: Timeframe within which documents must be presented

9. Bank Obligations: Responsibilities and obligations of the issuing and any confirming banks

10. Governing Law and Jurisdiction: Applicable law (South African) and jurisdiction for dispute resolution

What sections are optional to include in a Deferred Lc?

1. Transferability: Include when the LC needs to be transferable to a second beneficiary

2. Partial Shipments: Include when partial shipments are allowed or prohibited

3. Transhipment: Include when specific transhipment provisions are required

4. Insurance Requirements: Include when specific insurance coverage needs to be specified

5. Force Majeure: Include when specific force majeure provisions beyond standard UCP terms are needed

6. Anti-Money Laundering Provisions: Include when enhanced AML requirements are necessary

7. Sanctions Compliance: Include when dealing with potentially sensitive jurisdictions or parties

What schedules should be included in a Deferred Lc?

1. Schedule A - Document Checklist: Detailed checklist of all required documents and their specifications

2. Schedule B - Payment Schedule: Detailed breakdown of payment terms, dates, and calculations

3. Schedule C - Shipping Terms: Specific shipping requirements and Incoterms

4. Schedule D - Form of Demand: Template for presentation of documents and payment demand

5. Appendix 1 - UCP 600 Incorporation: Specific UCP 600 articles incorporated by reference

6. Appendix 2 - Banking Details: Complete banking information for all parties

7. Appendix 3 - Specimen Signatures: Authorized signatures for all relevant parties

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

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Jurisdiction

South Africa

Publisher

Genie AI

Document Type

Letter of Credit

Sector

International Trade

Cost

Free to use
Relevant legal definitions
Advising Bank
Applicant
Banking Day
Beneficiary
Bill of Exchange
Commercial Invoice
Compliant Presentation
Confirming Bank
Credit
Deferred Payment Date
Deferred Payment Undertaking
Documents
Draft
Expiry Date
Force Majeure
Governing Law
ICC
Issuing Bank
Letter of Credit
Maturity Date
Negotiating Bank
Non-Compliant Presentation
Notification of Acceptance
Payment Terms
Presentation
Reimbursing Bank
Sanctioned Country
Shipping Documents
South African Reserve Bank
Specified Documents
Trade Terms
Transport Documents
UCP 600
URDG 758
Usance Period
Valid Claim
Exchange Control Regulations
Authorized Dealer
Documentary Requirements
Sight Payment
Discounting
Acceptance
Negotiation
Collection Documents
Clean Collection
Documentary Collection
Clauses
Issuance
Payment Terms
Documentary Requirements
Bank Obligations
Presentation Requirements
Expiry and Validity
Maturity
Deferred Payment Terms
Document Examination
Transfer Rights
Non-Assignment
Bank Charges
Discrepancy Handling
Foreign Exchange Compliance
Regulatory Compliance
Anti-Money Laundering
Sanctions
Force Majeure
Governing Law
Jurisdiction
Dispute Resolution
Notices
Amendment
Cancellation
Severability
Waiver
Confidentiality
Entire Agreement
Representations and Warranties
Indemnification
Default Events
Remedies
UCP 600 Application
Compliance with Laws
Bank Communications
Document Processing
Security Provisions
Insurance Requirements
Shipping Terms
Relevant Industries

Banking and Financial Services

International Trade

Manufacturing

Agriculture

Mining

Retail

Wholesale

Construction

Energy

Commodities Trading

Import/Export

Logistics and Transportation

Relevant Teams

Trade Finance

Treasury

Legal

Compliance

Risk Management

International Banking

Operations

Documentary Credits

Supply Chain

Finance

International Trade Operations

Credit Administration

Relevant Roles

Trade Finance Manager

International Trade Specialist

Treasury Manager

Financial Controller

Import/Export Manager

Credit Manager

Documentary Credits Specialist

Trade Operations Manager

Risk Manager

Compliance Officer

Legal Counsel

Banking Relationship Manager

Chief Financial Officer

Supply Chain Manager

Industries
Banks Act 94 of 1990: Primary legislation governing banking activities in South Africa, including the issuance of letters of credit and related banking services
Exchange Control Regulations: Regulations under the Currency and Exchanges Act 1933, controlling foreign exchange transactions and international payments in South Africa
UCP 600: Uniform Customs and Practice for Documentary Credits - International rules governing LCs, widely adopted in South Africa for international trade finance
URDG 758: Uniform Rules for Demand Guarantees - ICC rules relevant for standby letters of credit and demand guarantees
Consumer Protection Act 68 of 2008: Relevant if any party to the LC is acting as a consumer rather than in the course of business
Financial Intelligence Centre Act 38 of 2001: Governs anti-money laundering requirements and know-your-customer obligations in financial transactions
National Payment System Act 78 of 1998: Regulates payment, clearing, and settlement systems in South Africa, relevant for LC payments
Electronic Communications and Transactions Act 25 of 2002: Relevant for electronic documentation and communications related to the LC
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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