The Performance Letter of Credit is a critical financial instrument used to secure performance obligations in significant commercial transactions. It is particularly relevant when one party (the beneficiary) requires security against potential performance defaults by their counterparty (the applicant). Under Dutch law, this document provides an independent, irrevocable commitment from a bank to pay upon documented evidence of default, offering stronger protection than contractual remedies alone. The document typically includes detailed performance criteria, drawing conditions, and documentary requirements. It combines elements of international banking practice (such as UCP 600) with specific Dutch legal requirements, making it a robust tool for risk management in commercial relationships. The Performance Letter of Credit is especially valuable in cross-border transactions where enforcement of contractual rights might be challenging.
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1. Letter Reference and Date: Unique reference number and issuance date of the Letter of Credit
2. Bank Details: Full details of the issuing bank including name, address, and SWIFT code
3. Beneficiary Details: Complete identification of the beneficiary including name, address, and registration details
4. Applicant Details: Complete identification of the applicant (principal) including name, address, and registration details
5. Credit Amount: Specification of the maximum drawable amount and currency
6. Underlying Contract Reference: Reference to the underlying contract or agreement this Performance LC supports
7. Expiry Details: Clear statement of expiry date and place
8. Performance Conditions: Specific conditions that constitute a breach of performance triggering the LC
9. Drawing Requirements: Detailed requirements for documents needed to make a drawing under the LC
10. Presentation Terms: Where and how documents should be presented
11. Governing Law and Jurisdiction: Specification of Dutch law and jurisdiction details
1. Partial Drawings Clause: Include when partial drawings are to be allowed under the LC
2. Transfer Provisions: Include when the LC should be transferable to another beneficiary
3. Multiple Beneficiary Provisions: Include when there are multiple beneficiaries who can make drawings
4. Auto-Extension Clause: Include when the LC should automatically extend unless notice is given
5. Counter-Guarantee Details: Include when there is a counter-guarantee from another bank
6. Special Payment Conditions: Include when there are specific payment timing or method requirements
1. Schedule A - Performance Standards: Detailed criteria for measuring performance under the underlying contract
2. Schedule B - Drawing Certificate Template: Standard form for beneficiary to complete when making a drawing
3. Schedule C - Document Checklist: List of all required documents for a compliant presentation
4. Schedule D - Notice Forms: Standard forms for various notices under the LC
5. Appendix 1 - Authorized Signatories: List of persons authorized to sign documents for each party
6. Appendix 2 - Bank Payment Instructions: Detailed banking information for payments under the LC
Relevant legal definitions
Clauses
Relevant Industries
Construction
Infrastructure
Engineering
Manufacturing
Energy
Oil & Gas
Telecommunications
Information Technology
Maritime
International Trade
Real Estate Development
Mining
Utilities
Defense Contracting
Relevant Teams
Legal
Finance
Treasury
Risk Management
Commercial Operations
Procurement
Contract Administration
Project Management
International Trade
Banking Operations
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Contract Manager
Project Manager
Legal Counsel
Trade Finance Manager
Risk Manager
Commercial Director
Procurement Manager
Business Development Director
Operations Director
Company Secretary
Credit Controller
Banking Relationship Manager
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