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Letter Of Credit Facility for Germany

Letter Of Credit Facility Template for Germany

This document establishes a Letter of Credit Facility agreement under German law, providing a framework for the issuance of documentary credits by a bank in favor of the applicant's trading partners. The agreement complies with German banking regulations, including the Kreditwesengesetz (KWG) and relevant EU regulations, while incorporating international banking practices such as UCP 600. It details the facility limits, conditions for utilization, fee structures, security arrangements, and the rights and obligations of all parties involved in the trade finance arrangement.

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What is a Letter Of Credit Facility?

A Letter of Credit Facility agreement is essential for businesses engaged in international trade under German jurisdiction. This document establishes the legal framework under which a bank will issue Letters of Credit on behalf of its client (the applicant) to facilitate international trade transactions. The facility agreement outlines the maximum facility amount, validity period, conditions for issuance, fees, and security requirements. It incorporates both German banking regulations and international banking practices, making it suitable for cross-border transactions while ensuring compliance with local legal requirements. The agreement is particularly important for companies requiring ongoing access to trade finance instruments and typically includes provisions for multiple Letters of Credit to be issued under a single facility arrangement.

What sections should be included in a Letter Of Credit Facility?

1. Parties: Identification of the bank (issuing bank), the applicant (customer), and any other relevant parties

2. Background: Context of the facility arrangement and relationship between parties

3. Definitions: Key terms used throughout the agreement, including banking and trade finance specific terminology

4. Facility Terms: Core terms including facility amount, purpose, and validity period

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Utilization: Procedures and requirements for using the Letter of Credit facility

7. Fees and Commissions: All applicable fees, charges, and commission structures

8. Payment Terms: Terms for reimbursement of payments made under Letters of Credit

9. Representations and Warranties: Standard declarations about legal capacity, authority, and financial condition

10. Covenants: Ongoing obligations of the applicant during the facility period

11. Events of Default: Circumstances that constitute default and consequences

12. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

What sections are optional to include in a Letter Of Credit Facility?

1. Security Arrangements: Required when the facility is secured by collateral or guarantees

2. Multi-currency Provisions: Include when the facility allows for Letters of Credit in multiple currencies

3. Syndication Provisions: Required when multiple banks are involved in providing the facility

4. Islamic Banking Provisions: Include when the facility needs to comply with Islamic banking principles

5. Parent Company Guarantee: Include when a parent company guarantee is required as additional security

6. Anti-Money Laundering Provisions: Detailed AML provisions when required by specific circumstances or high-risk transactions

What schedules should be included in a Letter Of Credit Facility?

1. Facility Limits and Sub-limits: Detailed breakdown of facility limits by type, currency, or purpose

2. Fee Schedule: Comprehensive list of all applicable fees and calculation methods

3. Form of Utilization Request: Standard form for requesting issuance of Letters of Credit

4. Conditions Precedent Documents: List of required documents to be provided before facility activation

5. Authorized Signatories: List of persons authorized to request Letters of Credit

6. Standard Forms: Templates for various notices and certificates required under the facility

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Ƶ

Document Type

Letter of Credit

Cost

Free to use
Relevant legal definitions














































Clauses






























Relevant Industries

Manufacturing

International Trade

Import/Export

Wholesale

Retail

Construction

Energy

Agriculture

Mining

Automotive

Textiles

Electronics

Chemical Industry

Commodities Trading

Heavy Industry

Shipping and Logistics

Relevant Teams

Legal

Finance

Treasury

Trade Finance

Procurement

Supply Chain

Risk Management

Compliance

International Business

Corporate Banking

Credit Risk

Relevant Roles

Chief Financial Officer

Treasury Manager

Trade Finance Manager

Finance Director

Import/Export Manager

Procurement Director

Supply Chain Manager

Banking Relationship Manager

Credit Risk Manager

Commercial Director

Legal Counsel

Compliance Officer

Financial Controller

Account Manager - Corporate Banking

International Business Development Manager

Industries







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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