Sample Document: Letter of Credit (Documentary Credit)
Opens by means of full text cable (in SWIFT format)

The sample letter of credit (L/C) below is a Confirmed Irrevocable Letter of Credit opens by means of full text cable (in SWIFT format).

 

By importing and exporting directly, many expensive and speculating middlemen are bypassed and one can enjoy directly the prices from overseas. Many people think exporting is difficult, which is definitely not true. There are two rules for a successful export:

1.       Close a well-defined contract, such as Roque Valente’s.

2.       Comply with the well-defined contract, which includes quantity, quality, sizes, species, you name it.

 

Some businessmen find Letter of Credits complicated, which in fact they are not because they are pretty obvious. Information about delivery, date, quantity, price etc etc are clearly specified. See for an example: www.roquevalente.com/LC payment.htm. The problem is however, that costs are relatively high. Nevertheless there exist possibilities to lower costs by using a revolving LC, or an LC with year quantity allowing partial shipments.

 

What matters is that the exporter has a guarantee of its payment and a creditworthy client, and the client in return has the guarantee of its goods. No goods; no payment. No payment; no goods. All you need to do is to print the instructions below and have your bank explain them to you. That’s it!

 

 

 



- - - - - - - - - - - - - - - - - - - - - - - - - - Transmission - - - - - - - - - - - - - - - - - - - - - - - - - - -



Received from SWIFT

Network priority: Normal

Message output Reference: 6543 010126

Message input Reference: 6543 010125

- - - - - - - - - - - - - - - - - - - - - - - - - - Message Header - - - - - - - - - - - - - - - - - - - - - - - - -



SWIFT output delivery status: Open Asked

FIN 701 Issue of a documentary credit

Sender:

The Sun Bank (your bank)
Sunlight City
Import-Country

Receiver:

The Moon Bank (the Roque Valente’ bank)
5 Moonlight Blvd.
Export-City and Postal Code
Export-Country

NUR: SB-87654                                    Banking priority: Normal

- - - - - - - - - - - - - - - - - - - - - - - - - - Message Text - - - - - - - - - - - - - - - - - - - - - - - - - - -

20

:

Documentary credit number
SB-87654

23

:

Issuing bank's reference
SBRE-777

31C

:

Date of Issue
January 26, 2001

31D

:

Date and place of expiry
March 26, 2001       Export-City, Export-Country

32B

:

Currency code amount
Twenty Five Thousand U.S. Dollars (USD 25,000.00)

39B

:

Maximum credit amount
Not exceeding Twenty Five Thousand U.S. Dollars (USD 25,000.00)

40A

:

Form of documentary credit
Irrevocable

41D

:

Available with ... by ...
Draft(s) drawn on The Moon Bank, by payment

42C

:

Drafts at
At sight for full invoice value

42D

:

Drawee - Name and Address
The Moon Bank, 5 Moonlight Blvd., Export-City and Postal Code, Export-Country

43P

:

Partial shipments
Allowed

43T

:

Transhipments
Allowed

44A

:

On board/disp/taking charge
Moonbeam Port, Export-Country

44B

:

For transportation to
Sunny Port, Import-Country

44C

:

Latest date of shipment
March 19, 2001

45A

:

Description of goods and services
100 Sets 'ABC' Brand Pneumatic Tools, 1/2" drive,
complete with hose and quick couplings, CIF Sunny Port

46A

:

Documents required

1.       Signed commercial invoice in five (5) copies indicating the buyer's Purchase Order No. DEF-101 dated January 10, 2001.

2.       Packing list in five (5) copies.

3.       Full set 3/3 clean on board ocean bill of lading, plus two (2) non-negotiable copies, issued to order of The Sun Bank, Sunlight City, Import-Country, notify the above accountee, marked "freight Prepaid", dated latest March 19, 2001, and showing documentary credit number.

4.       Insurance policy in duplicate for 110% CIF value covering Institute Cargo Clauses (A), Institute War and Strike Clauses, evidencing that claims are payable in Import-Country.

 

47A

:

Additional conditions

1.       All documents indicating the Import License No. IP/123456 dated January 18, 2001.

2.       Draft(s) drawn under this credit must be marked: "Drawn under documentary credit No. SB-87654 of The Sun Bank, Sunlight City, Import-Country, dated January 26, 2001".

3.       This credit is subject to the Uniform Customs and Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500.

 

48

:

Period of presentation
Documents must be presented for payment within 30 days after the date of shipment.

49

:

Confirmation instructions
Add your confirmation

50

:

Applicant (you)
DEF Imports, 7 Sunshine Street, Sunlight City, Import-Country

52A

:

Issuing bank (your bank)
The Sun Bank, Sunlight City, Import-Country

57D

:

Advise through bank
The Moon Bank, 5 Moonlight Blvd., Export-City and Postal Code, Export-Country

59

:

Beneficiary (Roque Valente)
UVW Exports, 88 Prosperity Street East, Suite 707, Export-City and Postal Code, Export-Country

71B

:

Charges
All charges outside the Import-Country are on beneficiary's account

72

:

Sender to receiver information
This is an operative instrument, no mail confirmation to follow

78

:

Instruction to pay/accept/negot. bank
Documents to be forwarded to us in one lot by courier

- - - - - - - - - - - - - - - - - - - - - - - - - - Message Trailer - - - - - - - - - - - - - - - - - - - - - - - - -


MAC: ABCD1234

CHK: ABCDEFG12345

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications