Letter Of Credit Agreement Template for United Arab Emirates

The Letter of Credit Agreement is a crucial document in international trade finance, particularly relevant in the UAE's position as a global trading hub. It serves as the foundational agreement between the applicant (typically an importer), the issuing bank, and other relevant parties, establishing the framework for letter of credit issuance and management. The agreement must comply with UAE Federal Law No. 18 of 1993 (Commercial Code), UAE Federal Law No. 14 of 2018 (Central Bank Law), and incorporate international standards such as UCP 600. It's used when parties require a secure payment mechanism in international trade transactions, providing detailed terms for document handling, payment conditions, fees, and risk allocation. The document can be structured to accommodate both conventional and Sharia-compliant transactions, reflecting the UAE's dual banking system.

1. Parties: Identification of all parties including the applicant, issuing bank, beneficiary, and any advising or confirming banks

2. Background: Context of the letter of credit agreement, including reference to the underlying commercial transaction

3. Definitions: Detailed definitions of terms used throughout the agreement, including banking and trade finance specific terminology

4. Letter of Credit Terms: Essential terms including amount, expiry date, and form of the letter of credit

5. Rights and Obligations: Detailed responsibilities of each party including document presentation requirements and examination standards

6. Fees and Charges: Breakdown of all applicable fees, charges, and commission structures

7. Payment Terms: Specific conditions for payment, reimbursement obligations, and currency provisions

8. Security and Collateral: Details of any security or collateral required to support the letter of credit

9. Representations and Warranties: Standard banking and commercial representations and warranties from all parties

10. Events of Default: Circumstances constituting default and corresponding remedies

11. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction provisions

12. Notices: Communication procedures and contact details for all parties