Document background
The Reverse Letter of Credit serves as a crucial financial instrument in international trade transactions under Dutch law, providing a specialized mechanism where the traditional letter of credit process is reversed. This document is particularly valuable when sellers require additional security in transactions or when complex supply chain financing is needed. It details the roles and responsibilities of all parties, documentation requirements, payment terms, and compliance obligations under both Dutch and EU banking regulations. The RLOC is commonly used in situations where the seller holds stronger negotiating power or where traditional letter of credit arrangements are not suitable for the transaction structure. The document incorporates provisions from the Dutch Civil Code, UCP 600, and relevant EU directives, ensuring compliance with both local and international banking standards.
