Terms and conditions

Created with Sketch.

Format of the documentary credit: :

  • An Irrevocable Credit represents a firm commitment by the issuing bank (can only be modified or cancelled with the agreement of all parties).

Special credits: :

  • A Revolving Credit is a documentary credit whose amount and duration are automatically renewed without the need to modify the credit.
  • A Transferable Credit is a documentary credit that allows the beneficiary to make the documentary credit (in whole or in part) available to another beneficiary (referred to as the second beneficiary).
  • A Red Clause Credit is a documentary credit with a clause that authorises the negotiating bank to provide advances to the beneficiary.

Documentary credit number:

The documentary credit number is the issuing bank’s reference information relating to this credit.

Date of issue :

The date of issue is the date the documentary credit was transmitted (Swift Message 700) by the issuing bank to the notifying bank.

Validity date :

The validity date is the expiration date of the issuing bank’s commitment, representing the documentary credit’s expiration date.

Location of validity :

The location of validity is the location where the documents must be presented. Typically, the country that is listed is the country where the notifying or confirming bank is based.

Issuing bank: :

The issuing bank acts on behalf of and in the name of the applicant. Typically, this is established in the applicant’s country.

Country :

Country where your client (the applicant) is located.

Applicant :

Your client’s name and address.

Beneficiary :

Your company’s name and full address.

Amount :

The amount of the documentary credit and the invoicing currency in which it is denominated.

Tolerance :

If the terms “around”, “approximately”, “circa” or a similar term qualify the amount, a variation of +/- 10% will be tolerated (UCP art. 39 A).

Achievable :

The bank that produces the documentary credit. The bank that is authorised to “pay”, “accept” or “negotiate” a credit.

Terms of use :

The modes of realisation :

  • The demand credit (By Payment / At Sight), under which the bank undertakes to pay you upon presentation of compliant documents and when conditions have been met.
  • The deferred payment (By DEF/ Deferred Payment), under which the bank undertakes to pay you at the end of a period defined in the credit if it deems the documents to be compliant.
  • The acceptance credit (By Acceptance), under which the issuing or confirming bank accepts a bank draft that you will draw on it and undertakes to pay it at maturity, upon presentation of compliant documents.
  • The negotiation credit By Negotiation), under which the bank will pay the amount of the bank draft or the documents you submit to it as soon as they are determined to be compliant. The negotiated documentary credit can also act as a credit instrument similar to the acceptance documentary credit in the event that a payment period (usage-based bank draft) is stipulated.

Drawings :

Drawings represent “payment terms”, the time period after which the bank will pay the amount of the bank draft (if the documents are deemed to be compliant).

For deferred payments, the time period after which the bank will pay you (if the documents are deemed to be compliant).

Partial shipments :

Authorisation or prohibition of partial shipments. In the absence of specific instructions, the credit issued with reference to the UCP will be considered as authorising partial shipments (UCP, Art. 40).

Transhipment :

Authorisation or prohibition of transhipments (unloading and reloading of goods from one vessel to another during a journey). In the absence of specific instructions, the credit issued with reference to the UCP will be considered as authorising transhipment in the event that the entire journey by sea is covered by a single bill of lading.

Incoterm :

The Incoterm mentioned in the credit (typically stipulated in field “45A”).

If the Incoterm is not mentioned in the credit, please indicate that of the contract or your commercial offer.

Location :

The location associated with the Incoterm.

Location of loading :

Location where the goods are loaded (port, airport,… depending on the mode of transport used)

Place of destination of the goods :

Typically, the location where the goods are unloaded (port, airport,… depending on the mode of transport used)

Shipping deadline :

This date refers to the very latest date of shipment. If no shipping deadline is specified in this field, banks will refuse shipping documents with a shipping date that is after the expiration date specified in the credit.

Required documents :

The documents listed in the credit. These documents must be identified in terms of their title, their purpose and their number (originals and copies).

Additional conditions :

These conditions list the obligations to be fulfilled pursuant to this documentary credit.

Commissions and bank fees :

These instructions indicate the distribution of bank fees.

DSubmission deadline :

This field specifies the period during which the documents must be submitted. If the period is not specified, the presentation period must not exceed 21 days following the date of shipment (before the credit’s expiration date).

Confirmation instruction :

If the expressions “confirm”, “may add” or similar are specified in this field: confirmation is required by the issuing bank.

If the expressions “without” or similar are specified in this field: confirmation is not required by the issuing bank.

Advising bank :

The bank that notified you of (forwarded) the documentary credit

Date of notification :

The date on which the documentary credit was sent to your departments by the notifying bank.

Confirming bank :

The bank that agrees to add its confirmation.

In general, the advising bank becomes the confirming bank as soon as it agrees to confirm the credit.