Recourse Letter Of Credit Template for Hong Kong

The Recourse Letter of Credit is essential in international trade finance transactions where banks seek to protect their interests while facilitating global commerce. This document is particularly relevant in Hong Kong, a major international financial center, where it operates within the jurisdiction's sophisticated banking and commercial law framework. It is used when an issuing bank needs to establish clear rights of recourse against the applicant (typically an importer) in case of default or other specified circumstances. The document includes detailed provisions about reimbursement obligations, trigger events, notice requirements, and enforcement procedures, all governed by Hong Kong law and compliant with international banking practices. The Recourse Letter of Credit helps manage risk in trade finance transactions while providing clarity and certainty to all parties involved.

1. Letter Header: Bank's letterhead, date, reference number, and addressee details

2. Reference to Original LC: Clear identification of the original Letter of Credit including LC number, date, amount, and beneficiary

3. Transaction Details: Description of the underlying commercial transaction and related documents

4. Recourse Terms: Explicit statement of the bank's right of recourse against the applicant

5. Payment Obligations: Details of the applicant's obligation to reimburse the bank upon exercise of recourse

6. Trigger Events: Specific circumstances under which the bank may exercise its recourse rights

7. Notice Requirements: Procedures and timeframes for the bank to notify the applicant when exercising recourse

8. Indemnification: Applicant's obligation to indemnify the bank against losses, costs, and expenses

9. Governing Law and Jurisdiction: Statement that the letter is governed by Hong Kong law and subject to Hong Kong courts' jurisdiction

10. Execution Block: Signature blocks for authorized bank representatives and acknowledgment by the applicant