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The Standby Letter of Credit Agreement is a crucial document in international trade and financial transactions, providing a formal framework for the issuance of standby letters of credit under Swiss law. This agreement is typically used when parties require a reliable payment security instrument, often in cross-border transactions or significant commercial deals. It outlines the relationship between the issuing bank, the applicant requesting the letter of credit, and the beneficiary, detailing the conditions under which the credit can be drawn, reimbursement obligations, and compliance requirements. The document must comply with Swiss federal banking regulations and the Swiss Code of Obligations, while often incorporating international banking standards such as ISP98 or UCP 600. This type of agreement is particularly valuable in situations where parties need a dependable backup payment mechanism or performance guarantee, serving as a risk mitigation tool in various commercial contexts.

1. Parties: Identifies all parties to the agreement including the issuing bank, applicant, and beneficiary

2. Background: Sets out the context of the agreement and the underlying transaction or relationship being supported

3. Definitions: Defines key terms used throughout the agreement

4. Issuance of the Letter of Credit: Details the bank's commitment to issue the standby letter of credit and the conditions precedent

5. Amount and Currency: Specifies the credit amount, currency, and any provisions for adjustment

6. Term and Expiry: States the duration of the letter of credit and expiry conditions

7. Drawing Conditions: Specifies the conditions and documentation required for drawing under the letter of credit

8. Fees and Charges: Details all fees, commissions, and charges payable to the issuing bank

9. Reimbursement Obligations: Sets out the applicant's obligations to reimburse the bank for any drawings

10. Representations and Warranties: Contains standard representations and warranties from the applicant

11. Events of Default: Lists circumstances constituting default and consequences

12. Governing Law and Jurisdiction: Specifies Swiss law as governing law and jurisdiction for disputes

13. Notices: Details how formal communications between parties should be made

14. Miscellaneous: Contains standard boilerplate provisions including amendments, assignments, and severability