At Fakhir & Co., we specialize in providing comprehensive legal services related to Letters of Credit (LCs), ensuring secure and efficient international trade transactions for our clients in Abu Dhabi and beyond.
What Is a Letter of Credit?
A Letter of Credit is a financial instrument issued by a bank on behalf of a buyer, guaranteeing payment to the seller upon the fulfillment of specified terms and conditions. It serves to mitigate risks in international trade by assuring the seller of payment, provided that all stipulated requirements are met.
Types of Letters of Credit
Understanding the various types of LCs is crucial for selecting the appropriate instrument for your transaction. Each type offers distinct features tailored to specific business needs:
Revocable LC
Can be amended or cancelled by the issuing bank without prior notice to the beneficiary. Offers less security to the seller.
Irrevocable LC
Cannot be amended or cancelled without the consent of all parties involved. Provides greater security for both buyer and seller.
Confirmed LC
Involves a second bank (confirming bank) that adds its guarantee to the LC, offering additional security to the seller.
Transferable LC
Allows the beneficiary to transfer part or all of the credit to another party, commonly used in intermediary transactions.
 Standby LC
Acts as a secondary payment method, ensuring payment if the buyer fails to fulfill contractual obligations.
Revolving LC
Suitable for ongoing transactions, allowing the credit to be reused within a specified period or up to a certain limit.
 Red Clause LC
Enables the seller to receive an advance payment before shipment, facilitating procurement and production.
Green Clause LC
An extension of the Red Clause LC, providing additional funds for pre-shipment expenses like storage and insurance.
How We Assist You?
Our team at Fakhir & Co. offers expert legal services in drafting and reviewing Letters of Credit to ensure they align with international trade standards and protect your interests.
We assist in:
Drafting Letters of Credit
Tailoring LCs to meet specific transaction requirements and legal frameworks.
Reviewing Terms and Conditions
Ensuring clarity and fairness in the terms outlined in the LC.
Advising on LC Types
Recommending the most suitable LC type based on the nature of the transaction and associated risks.
Dispute Resolution
Providing legal support in case of discrepancies or disputes arising from the LC.
Key Elements in Drafting a Letter of Credit
When drafting a Letter of Credit, it’s essential to include:
Issuer and Beneficiary Details
Complete information of the buyer (applicant) and seller (beneficiary).
Credit Amount and Currency
The specified amount and currency of the LC.
Terms and Conditions
Detailed conditions that must be met for payment to be made.
Documents Required
List of documents the seller must present to claim payment.
Validity Period
The time frame within which the LC is valid.
Governing Law and Jurisdiction
Applicable laws and dispute resolution mechanisms.
Contact Us Today and Schedule a Consultation
For professional assistance in drafting or reviewing Letters of Credit, contact Fakhir & Co. Our experienced legal team is dedicated to facilitating secure and efficient international trade transactions.