In addition to the date of issuance, bill of exchange terms, shipment period, validity period and effective place, the contents of the letter of credit also include the following:
1. Documents clause and goods description
(1) Documents required clause. The documents required clause refers to the type, number of copies, issuance conditions and other contents of the documents that the beneficiary must submit as specified by the issuing bank in the letter of credit. The document clauses of the letter of credit should be consistent and should not be contradictory.
(2) Description of goods and/or services. The description of goods and/or services in the letter of credit refers to the description of the name, quantity, model or specification of the goods in the letter of credit. According to international practice, the description of the content should not be cumbersome, because cumbersome descriptions will cause trouble for the beneficiary to prepare the documents. The description should be accurate, clear and complete. If the description is too cumbersome, the beneficiary should be advised to negotiate with the applicant to modify this part of the letter of credit.
2. Special conditions clause of letter of credit
Sometimes, special conditions are attached to the letter of credit for the beneficiary, notifying bank, paying bank, accepting bank, confirming bank or negotiating bank. For unacceptable terms, the issuing bank or the applicant should be consulted immediately for modification.
3. Reimbursement clause of letter of credit
The reimbursement clause of letter of credit refers to the clause stipulated in the letter of credit by the issuing bank on how to reimburse the letter of credit amount to the paying bank, accepting bank, confirming bank or negotiating bank. The reimbursement clause of letter of credit directly involves the issue of collection of exchange, so the correctness and rationality of the reimbursement clause must be guaranteed. For letters of credit with complex reimbursement clauses and tortuous reimbursement routes, the issuing bank should be asked to modify them as much as possible.
4. Issuing bank’s guarantee clause
The issuing bank expresses its payment responsibility through this clause. Guarantee clauses often begin with “We hereby engage (agree) or We hereby undertake.” Since UCP600 has strictly stipulated the responsibilities of banks, this clause is no longer required in letters of credit transmitted through SWIFT.