If the importer and exporter stipulate in the sales contract that the letter of credit is used as the settlement method, the importer must submit an application for L/C issuing to the bank in a timely manner before the shipment period stipulated in the contract. The importer must submit a detailed application for L/C issuing, the format of which is provided by the issuing bank. In addition, if the foreign trade and foreign exchange management authorities of the importing country have specific requirements, the importer must also provide other documents, such as import licenses, foreign exchange quota certificates, and contract texts. As far as the letter of credit business itself is concerned, the most important document is the application for L/C issuing.
The content of the application for L/C issuing includes two parts; the first part is the importer’s detailed instructions to the issuing bank, which stipulates the contents that should be listed in the letter of credit, which should mainly be based on the trade contract. This part of the content will be copied by the issuing bank on the letter of credit, thus constituting the content of the letter of credit and binding on the exporter; the second part is the reimbursement agreement reached between the applicant and the issuing bank, which mainly stipulates the rights and obligations of both parties.
Since the format of the application form is provided by the issuing bank, it generally only records the obligations of the applicant and the rights and exemptions of the issuing bank, but does not specify the rights of the applicant and the obligations of the issuing bank. This is because letters of credit are handled in accordance with UCP600, and the rights and obligations not stated in the application form are clearly stipulated in UCP600.