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Letter Of Credit Contract Template for Malaysia

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Key Requirements PROMPT example:

Letter Of Credit Contract

"I need a Letter of Credit Contract for a Malaysian manufacturing company importing machinery worth USD 2 million from Germany, with payment to be made in three installments and documents to be presented by March 2025."

Document background
The Letter of Credit Contract serves as a fundamental document in international trade finance under Malaysian jurisdiction. It is typically used when businesses engage in cross-border transactions and require a secure payment mechanism. The contract establishes the framework for the Letter of Credit facility, detailing how the bank will issue LCs on behalf of the applicant, the conditions for payment to beneficiaries, and the documentary requirements that must be met. This document is essential for compliance with Malaysian banking regulations, particularly the Financial Services Act 2013, while also adhering to international banking standards such as UCP 600. It provides security for both buyers and sellers in international trade by ensuring payment against compliant document presentation.
Suggested Sections

1. Parties: Identification of the applicant (buyer), issuing bank, and beneficiary (seller)

2. Background: Context of the underlying transaction and purpose of the Letter of Credit

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

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

5. Validity Period: Expiry date and last date for presentation of documents

6. Payment Terms: Conditions for payment, including sight payment or deferred payment terms

7. Required Documents: List of documents required for presentation under the LC

8. Shipping Terms: Specific requirements for shipment, including latest shipment date and partial shipments

9. Bank Charges: Allocation of banking fees and charges between parties

10. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction

Optional Sections

1. Revolving Credit Provisions: Terms for revolving LC facility, included when the LC is revolving rather than single-use

2. Back-to-Back LC Terms: Additional provisions for back-to-back LC arrangements, used in intermediary trade situations

3. Red Clause Provisions: Terms for advance payment features, included when the LC contains red clause provisions

4. Transfer Rights: Terms regarding the transferability of the LC, included when the LC is transferable

5. Insurance Requirements: Specific insurance requirements beyond standard coverage, included for high-risk transactions

6. Force Majeure: Extended force majeure provisions beyond standard UCP terms, included for complex international transactions

Suggested Schedules

1. Schedule 1 - Document Requirements: Detailed list of required documents and their specific format requirements

2. Schedule 2 - Fee Schedule: Detailed breakdown of all applicable fees and charges

3. Schedule 3 - Standard Forms: Templates for amendment requests and other standard forms

4. Appendix A - UCP 600 Incorporation: Specific UCP 600 articles incorporated into the contract

5. Appendix B - Specimen Signatures: Authorized signatures for LC-related communications

6. Appendix C - Bank's Standard Terms: Issuing bank's standard terms and conditions for LC facilities

Authors

Alex Denne

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

Relevant legal definitions



































Clauses






























Relevant Industries

Banking and Financial Services

International Trade

Import/Export

Manufacturing

Commodity Trading

Shipping and Logistics

Retail

Wholesale Distribution

Agriculture

Energy and Resources

Relevant Teams

Legal

Finance

International Trade

Treasury

Risk Management

Compliance

Trade Operations

Commercial Banking

Documentary Credits

Supply Chain

Relevant Roles

Trade Finance Manager

International Business Director

Chief Financial Officer

Import/Export Manager

Treasury Manager

Credit Risk Officer

Documentary Credits Specialist

Trade Operations Manager

Compliance Officer

Legal Counsel

Banking Relationship Manager

Supply Chain Manager

Finance Director

Commercial Banking Officer

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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