The Performance Letter of Credit is a crucial financial instrument used in commercial transactions where one party seeks security for the performance obligations of another party. This document, governed by Belgian law, provides a bank's independent commitment to pay a specified amount upon presentation of compliant documents indicating a performance default. It is particularly valuable in international trade, construction projects, and large commercial contracts where parties need robust performance security. The Performance Letter of Credit includes essential details such as the parties involved, performance conditions, expiry date, and claim procedures, all structured to comply with Belgian banking regulations and international standards like UCP 600. This instrument differs from traditional letters of credit by focusing on performance security rather than payment for goods or services.
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1. Issuing Bank Details: Full name and address of the issuing bank
2. Letter of Credit Number: Unique reference number for the Letter of Credit
3. Date of Issue: Date when the Letter of Credit is issued
4. Beneficiary Details: Full name and address of the party in whose favor the Letter of Credit is issued
5. Applicant Details: Full name and address of the party requesting the Letter of Credit
6. Currency and Amount: Specified currency and maximum amount of the Letter of Credit
7. Expiry Date: Date and place of expiry of the Letter of Credit
8. Form of Presentation: Specified format and location for presenting documents
9. Performance Conditions: Specific conditions related to the underlying performance obligations that trigger the Letter of Credit
10. Required Documents: List of documents that must be presented to claim payment
11. Payment Terms: Conditions and timing of payment upon compliant presentation
12. Governing Law Statement: Explicit statement that Belgian law governs the Letter of Credit
1. Partial Drawings: Include when multiple partial drawings are permitted under the Letter of Credit
2. Transfer Conditions: Include when the Letter of Credit is transferable to other beneficiaries
3. Special Conditions: Include when there are additional specific requirements or conditions
4. Counter-Guarantee Details: Include when there is a counter-guarantee from another bank
5. Assignment of Proceeds: Include when assignment of proceeds is permitted
6. Force Majeure Clause: Include when specific force majeure provisions are required beyond standard UCP provisions
1. Schedule A - Performance Specifications: Detailed description of the performance obligations that are being guaranteed
2. Schedule B - Form of Demand: Standard format for making a demand under the Letter of Credit
3. Schedule C - Form of Certificate of Default: Template for certifying applicant's default in performance
4. Appendix 1 - Authorized Signatories: List of persons authorized to make presentations under the Letter of Credit
5. Appendix 2 - Reference Contract: Summary or extract of the underlying contract relating to the performance obligations
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Engineering
International Trade
Manufacturing
Energy and Utilities
Infrastructure Development
Telecommunications
Defense Contracting
Project Development
Commercial Real Estate
Mining and Resources
Industrial Services
Relevant Teams
Legal
Finance
Treasury
Risk Management
Commercial Operations
Procurement
International Trade
Project Management
Contract Administration
Banking Relations
Corporate Secretariat
Relevant Roles
Chief Financial Officer
Treasury Manager
Trade Finance Manager
Project Manager
Contract Manager
Financial Controller
Risk Manager
Commercial Director
Legal Counsel
Banking Relations Manager
Credit Manager
International Trade Specialist
Procurement Manager
Finance Director
Company Secretary
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