Letter Of Credit Reimbursement Agreement Template for Germany

The Letter of Credit Reimbursement Agreement is essential in international trade finance transactions where letters of credit are used as a payment mechanism. This document is typically required when a bank agrees to issue letters of credit on behalf of its customer, establishing the customer's obligation to reimburse the bank for any payments made under such letters of credit. Under German law, this agreement must comply with the German Civil Code (BGB), German Banking Act (KWG), and relevant EU regulations while incorporating international banking standards such as the UCP 600. The agreement covers critical aspects including payment obligations, fees, security arrangements, default provisions, and remedies. It's particularly important in cross-border transactions where the bank takes on the payment obligation to foreign beneficiaries on behalf of its German customers.

1. Parties: Identification of the parties to the agreement - typically the issuing bank and the applicant/customer

2. Background: Context of the agreement, including reference to the underlying Letter of Credit facility

3. Definitions and Interpretation: Definitions of key terms and interpretation rules used throughout the agreement

4. Letter of Credit Facility: Details of the LC facility, including maximum amount, validity period, and purposes

5. Reimbursement Obligations: Core obligations of the applicant to reimburse the bank for LC payments, including timing and currency

6. Fees and Charges: Structure and calculation of fees, charges, and interest related to the LC facility

7. Payment Mechanics: Procedures for making payments, including account details and payment methods

8. Representations and Warranties: Standard and specific representations made by the applicant

9. Covenants: Ongoing obligations of the applicant during the life of the agreement

10. Events of Default: Circumstances constituting default and consequences thereof

11. Bank's Rights and Remedies: Actions the bank can take in case of default or other specified circumstances

12. Changes to Parties: Rules regarding assignment and transfer of rights and obligations

13. Notices: Communication procedures between parties

14. General Provisions: Standard boilerplate clauses including amendments, waivers, severability

15. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction arrangements