The letter of credit (“L/C”) is an important tool for settlement of international trade transactions, however many Canadian businesses may be unfamiliar with this payment instrument and its benefits.
The applicable rules for letters of credit (“L/Cs”) are the UCP 600 (Uniform Customs and Practice for Documentary Credits, ICC Publication No. 600), which apply to all LCs which expressly indicate that they are subject to the rules.
The parties involved in an LC include the applicant of the LC, the beneficiary of the LC, the issuing bank, the advising bank, the confirming bank (if any) and the nominated bank(s) (if any). If you are an applicant or a beneficiary, how well do you understand LCs? Why do you need LCs (do you)? What do you need to know about UCP 600? What is “international standard banking practice”? How can you make complying presentations?
Our advisors can provide you with assistance and consultation services on letters of credit, including but not limited to:
• Advise on LC’s technicality and formalities with banks.
• Advise on document preparation services or document pre-check for complying presentations, efficiency, and shorter working capital cycle. We can help you find the right service providers.
• Assist in specific LC transactions, e.g. review the terms of the LC for workability, advise on various payment terms and related pre/post-shipment financing options, etc.
For further details, please contact us for a free initial consultation.