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The LC Agreement is a fundamental document in international trade finance, used when establishing a framework for the issuance of letters of credit under New Zealand law. It is typically employed when a company regularly requires letters of credit for its international trade operations, setting out a master agreement structure rather than negotiating terms for each individual LC. The agreement ensures compliance with New Zealand banking regulations, international banking practices (UCP 600), and relevant trade finance requirements. It covers key aspects such as application procedures, bank obligations, fees, security arrangements, and risk allocation. This document is essential for businesses engaged in international trade requiring documentary credits as a secure payment method.

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

2. Background: Sets out the context of the agreement and the underlying transaction necessitating the LC

3. Definitions: Defines key terms used throughout the agreement, including banking, trade, and documentary credit-specific terminology

4. LC Issuance and Terms: Details the conditions for LC issuance, amount, currency, and expiry date

5. Documentary Requirements: Specifies all documents required for presentation under the LC

6. Drawing Conditions: Sets out the conditions and procedures for drawing under the LC

7. Fees and Charges: Specifies all fees, charges, and commission payable in connection with the LC

8. Representations and Warranties: Contains standard and LC-specific representations and warranties from the applicant

9. Undertakings: Details the ongoing obligations of the parties throughout the LC period

10. Events of Default: Lists circumstances constituting default and consequences thereof

11. Payments and Calculations: Details payment mechanisms, timing, and calculation methods

12. Communications: Specifies how notices and other communications should be made between parties

13. General Provisions: Contains standard boilerplate provisions including governing law, jurisdiction, and amendments