The Bond Letter of Credit is a specialized financial instrument commonly used in Saudi Arabia for securing various commercial and contractual obligations. This document is particularly relevant when parties require a bank-backed guarantee that combines the features of documentary credits and performance bonds. It is issued in compliance with Saudi Arabian banking regulations and must strictly adhere to Shariah principles, making it distinct from conventional western banking instruments. The Bond Letter of Credit typically includes specific terms for drawing conditions, expiry dates, and document requirements, while also incorporating necessary Shariah-compliant structures. It's frequently used in construction projects, government contracts, and international trade transactions where Saudi Arabian entities are involved, providing security to beneficiaries while ensuring the applicant's interests are protected under local law.
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1. Issuing Bank Details: Complete details of the issuing bank including name, branch, address, and reference numbers
2. Beneficiary Information: Full details of the beneficiary including name, address, and any reference numbers
3. Applicant Information: Complete details of the applicant requesting the letter of credit
4. Credit Amount and Currency: Specific amount and currency of the letter of credit, stated in both numbers and words
5. Type of Credit: Specification that this is an irrevocable standby letter of credit
6. Expiry Date: Clear statement of the expiry date and place
7. Purpose of Credit: Description of the underlying transaction or purpose for which the credit is issued
8. Drawing Terms: Specific conditions and documentation required for drawing under the credit
9. Governing Law Declaration: Statement that the credit is governed by Saudi Arabian law and Shariah principles
10. Authentication: Official bank signatures, stamps, and authentication details
1. Partial Drawings Clause: Include when partial drawings are to be allowed under the credit
2. Transfer Rights: Include when the credit is to be transferable to other beneficiaries
3. Silent Confirmation: Include when there's a provision for silent confirmation by another bank
4. Force Majeure Clause: Include when specific force majeure provisions are required beyond standard UCP provisions
5. Language Preference: Include when the credit will be issued in multiple languages
6. Special Instructions: Include when there are specific handling or processing instructions
1. Schedule A - Required Documents: Detailed list of all documents required for drawing under the credit
2. Schedule B - Drawing Certificate Format: Template of the drawing certificate to be presented by the beneficiary
3. Schedule C - Form of Demand: Standard format for making a demand under the letter of credit
4. Appendix 1 - Shariah Compliance Declaration: Declaration confirming the letter of credit's compliance with Shariah principles
5. Appendix 2 - Authentication Instructions: Specific instructions for authenticating documents and verifying their authenticity
6. Appendix 3 - Communication Procedures: Detailed procedures for all communications related to the letter of credit
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
International Trade
Manufacturing
Energy and Utilities
Real Estate Development
Government and Public Sector
Transportation and Logistics
Oil and Gas
Mining and Resources
Telecommunications
Defense Contracting
Relevant Teams
Legal
Finance
Treasury
Trade Finance
Compliance
Risk Management
Commercial Operations
Project Management
International Business
Banking Operations
Corporate Finance
Credit Administration
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Trade Finance Manager
Commercial Director
Project Manager
Contracts Manager
Legal Counsel
Compliance Officer
Banking Relationship Manager
Risk Manager
Corporate Finance Manager
International Trade Specialist
Financial Controller
Credit Manager
Operations Director
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