The letter of credit mainly includes the following contents.
① Description of the letter of credit itself: such as the letter of credit number, opening date, expiration date and place of expiration, and the deadline for presentation of documents.
② Payment method: whether it is immediate payment, deferred payment, acceptance or negotiation.
③ Type of letter of credit: whether it is confirmed by another bank, whether it is transferable, etc.
④ Parties to the letter of credit: applicant, issuing bank, beneficiary, notifying bank, etc. In addition, some letters of credit also have designated paying banks, reimbursing banks, accepting banks, and designated negotiating banks.
⑤ Bill of exchange terms: including the type of bill of exchange, drawee, payment deadline, bill of exchange terms and bill of exchange date, etc.
Any letter of credit that does not require a bill of exchange does not have this content.
⑥ Goods terms: including the name, specifications, quantity, packaging, price, etc. of the goods.
⑦ Payment currency and credit amount: including currency and total amount. Currency should usually include the abbreviation and capitalization of currency. Total amount is usually written in capital letters and Arabic numerals. The credit amount is the upper limit of the issuing bank’s payment liability. Some credits also stipulate a certain ratio of fluctuation.
⑧ Shipping and insurance terms: such as the port of shipment or departure, the port of discharge or destination, the shipping period, whether it can be shipped in batches, whether it can be transshipped, and how to ship in batches and transship. Insurance requirements under transactions concluded with CIF or CIP trade terms, the amount and type of insurance required, etc.
⑨ Document terms: usually require the submission of commercial invoices, transport documents and insurance documents. In addition, there are packaging documents, such as packing lists, weight lists, certificates of origin, inspection certificates, etc.
⑩ Special terms: vary depending on the needs of specific transactions. Common ones include requiring the notifying bank to add confirmation; limiting the negotiation by a certain bank; limiting loading to a certain ship or prohibiting loading to a certain ship; prohibiting docking at a certain port or prohibiting the selection of a certain route; the letter of credit will only take effect when the specified conditions are met, etc.
In addition, the letter of credit usually has the liability clause of the issuing bank, the text issued according to the “Uniform Customs and Practice for Documentary Credits”, as well as the letter of credit number, expiration place and date, the signature and seal of the issuing bank, etc.