A Direct Letter of Credit is a fundamental banking instrument used in international trade transactions under Saudi Arabian jurisdiction. It is particularly relevant when parties seek a secure payment method that complies with both international banking standards and Islamic finance principles. The document provides an irrevocable commitment from a bank to pay the beneficiary upon presentation of specified documents, typically relating to the shipment of goods. This instrument is governed by Saudi Arabian law, including SAMA regulations and Sharia principles, while also incorporating international UCP 600 guidelines. It includes detailed specifications about the credit amount, validity period, required documents, and payment terms. The Direct Letter of Credit is especially useful in situations where parties lack an established trading relationship or when local regulations require formal bank-mediated payment arrangements.
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1. Letter Reference and Date: Unique reference number and date of issuance of the Letter of Credit
2. Issuing Bank Details: Complete name and address of the issuing bank
3. Beneficiary Information: Full name and address of the beneficiary (seller/exporter)
4. Applicant Information: Full name and address of the applicant (buyer/importer)
5. Credit Amount and Currency: Specified amount and currency of the Letter of Credit
6. Type and Form of Credit: Specification that this is an irrevocable direct letter of credit
7. Expiry Date and Place: Validity period and location where the credit expires
8. Documentary Requirements: List of required documents for presentation
9. Shipment Terms: Details of shipment including latest shipment date and partial shipments status
10. Payment Terms: Specification of when and how payment will be made
11. Governing Law Statement: Reference to Saudi Law and Sharia compliance
1. Transferability Clause: Include when the credit needs to be transferable to a second beneficiary
2. Confirmation Instructions: Include when confirmation from another bank is required
3. Special Conditions: Include when there are additional requirements specific to the transaction
4. Back-to-Back Credit Provisions: Include when the credit will be used to support another letter of credit
5. Red Clause Provisions: Include when advance payment facilities are required
6. Green Clause Provisions: Include when storage facilities are involved in the transaction
1. Schedule A - Document Checklist: Detailed list of required documents and their specifications
2. Schedule B - Goods Description: Detailed description of the goods or services covered
3. Schedule C - Special Instructions: Any special instructions for document preparation or presentation
4. Appendix 1 - Bank Forms: Standard forms required by the issuing bank
5. Appendix 2 - Fee Schedule: Details of all applicable banking charges and fees
6. Appendix 3 - UCP 600 Reference: Relevant articles of UCP 600 applicable to this credit
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Import/Export
Retail
Wholesale
Commodities Trading
Oil and Gas
Consumer Goods
Industrial Equipment
Agriculture
Automotive
Electronics
Textiles
Relevant Teams
Trade Finance
Treasury
International Banking
Legal
Compliance
Finance
Trade Operations
Risk Management
Documentary Credits
International Business Development
Relevant Roles
Trade Finance Manager
International Trade Specialist
Treasury Manager
Finance Director
Import/Export Manager
Documentary Credits Specialist
Trade Operations Manager
Banking Relationship Manager
Chief Financial Officer
Financial Controller
Compliance Officer
Trade Finance Analyst
Credit Manager
Banking Operations Manager
International Business Development Manager
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