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Letter Of Credit Guarantee

Letter Of Credit Guarantee Template for Switzerland

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Key Requirements PROMPT example:

Letter Of Credit Guarantee

"I need a Letter of Credit Guarantee for a Swiss machinery export transaction worth CHF 2.5 million, with validity from March 1, 2025, to December 31, 2025, allowing partial drawings and requiring inspection certificates for each payment claim."

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Document background
A Letter of Credit Guarantee is essential in international trade and commercial transactions where parties seek secure payment mechanisms. This document is particularly relevant when dealing with Swiss banks or when parties choose Swiss law for its renowned stability and neutrality. The guarantee provides an independent, documentary-based payment undertaking from a bank, typically used in cross-border transactions to mitigate payment risks. The document includes specific terms regarding payment conditions, validity period, and documentary requirements, all structured within the Swiss legal framework. It's commonly used in trade finance, project finance, and large commercial transactions where the beneficiary requires a robust payment security backed by a Swiss bank's creditworthiness.
Suggested Sections

1. Letterhead and Date: Bank's official letterhead and date of issuance

2. Reference Number: Unique guarantee reference number for tracking and identification

3. Beneficiary Details: Full name and address of the party in whose favor the guarantee is issued

4. Applicant Details: Full name and address of the party requesting the guarantee

5. Underlying Transaction: Reference to the primary transaction or contract being guaranteed

6. Guarantee Amount: The maximum amount of the guarantee and currency

7. Validity Period: Effective date and expiry date of the guarantee

8. Terms of Payment: Conditions under which the guarantee can be called and payment process

9. Governing Law: Explicit statement of Swiss law as governing law

10. Document Requirements: List of required documents for calling the guarantee

11. Bank's Undertaking: Clear statement of bank's obligation to pay upon compliant presentation

12. Authentication: Bank's authorized signatures and authentication details

Optional Sections

1. Transferability Clause: Include when the guarantee needs to be transferable to another beneficiary

2. Partial Drawings: Include when multiple partial drawings are to be permitted

3. Force Majeure: Include when specific force majeure provisions are required beyond standard terms

4. Counter-Guarantee Reference: Include when issued under a counter-guarantee arrangement

5. Special Conditions: Include when there are additional specific conditions for calling the guarantee

6. Language Declaration: Include when the guarantee is issued in multiple languages

7. SWIFT Details: Include when the guarantee is to be advised through SWIFT

Suggested Schedules

1. Form of Demand: Template for making a compliant demand under the guarantee

2. Underlying Contract Extract: Relevant excerpts from the underlying contract being guaranteed

3. Required Documents List: Detailed list of documents required for guarantee claims

4. Authorized Signatories: List of persons authorized to sign demands under the guarantee

5. Bank's Standard Terms: General terms and conditions applicable to bank guarantees

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking & Financial Services

International Trade

Import/Export

Manufacturing

Construction

Energy

Commodities Trading

Shipping & Logistics

Infrastructure

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Trade Finance

Risk Management

Compliance

International Banking

Commercial Banking

Credit Administration

Operations

Relevant Roles

Trade Finance Manager

Documentary Credits Specialist

Banking Relationship Manager

Chief Financial Officer

Finance Director

Treasury Manager

Credit Risk Manager

International Trade Specialist

Commercial Banking Officer

Legal Counsel

Compliance Officer

Trade Operations Manager

Industries
Swiss Code of Obligations (Obligationenrecht): The primary source of Swiss contract law that governs contractual relationships, including banking contracts and guarantees. Particularly relevant are Articles 492-512 on guarantees and Article 1100 et seq. on documentary credits.
Swiss Banking Act (Bankengesetz): Regulates banking activities in Switzerland, including the issuance of letters of credit and related guarantees. Contains provisions on bank obligations and responsibilities in issuing financial instruments.
UCP 600: The Uniform Customs and Practice for Documentary Credits (ICC Publication No. 600) is the international standard rules for letters of credit, widely accepted by Swiss banks and courts.
Swiss Federal Act on International Private Law: Relevant for international letter of credit transactions, determining applicable law and jurisdiction in cross-border situations.
FINMA Circulars: Regulatory guidelines issued by the Swiss Financial Market Supervisory Authority that may affect the form and content of bank guarantees and letters of credit.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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