Document background
The Construction Letter of Credit is essential in large-scale construction projects under Swiss jurisdiction where significant financial commitments need to be secured. This document type emerged from the need to provide contractors with reliable payment assurance while protecting project owners' interests through structured disbursement conditions. The Construction Letter of Credit combines elements of traditional documentary credits with construction-specific requirements, incorporating both Swiss banking regulations and international UCP 600 standards. It is particularly crucial in projects where staged payments are tied to construction milestones and where formal verification of work completion is required before payment release. The document typically includes comprehensive details about the construction project, payment conditions, required documentation, and specific provisions for dealing with construction-related contingencies.
