10 Letters of Credit and Their Sample Templates

I've given a score to letters of credit in my post, 'What is a Letter of Credit? Types and Real-Life Uses'. I did some justice to that by providing real-life usage scenarios for each type of letter of credit. However, for academic purposes, some readers have requested templates for each.

In this post, I will be doing just that. And if you're a financial institution, these templates serve as a starting point and must be customized to fit the specifics of each transaction, including the names of the parties, amounts, dates, and detailed terms and conditions.

Note that in real-world scenarios, these documents are often prepared with the assistance of financial institutions and legal advisors to ensure compliance with international trade laws and regulations. Here are simplified templates for each type:

1. Commercial Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Letter of Credit No.: [LC Number]

Applicant: [Buyer's Name and Address]

Beneficiary: [Seller's Name and Address]

Amount: [Amount in Words and Figures]

Expiry Date: [Date]

We hereby issue this Irrevocable Commercial Letter of Credit in favor of the Beneficiary for the account of the Applicant for the amount not exceeding [Currency and Amount]. Payment to be made against presentation of the following documents:

1. Signed commercial invoice in triplicate.

2. Full set of clean onboard Bill of Lading.

3. Packing list.

4. Insurance policy or certificate.

This Letter of Credit is payable at sight upon presentation of the above documents to [Issuing Bank's Name and Address].

Signature: __________________

[Issuing Bank's Authorized Signature]

2. Standby Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Standby Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Amount in Words and Figures]

Expiry Date: [Date]

We hereby establish this Irrevocable Standby Letter of Credit in favor of the Beneficiary. This Letter of Credit is available by Beneficiary's draft at sight accompanied by a statement from the Beneficiary stating that the Applicant has failed to fulfill their contractual obligations.

Signature: __________________

[Issuing Bank's Authorized Signature]

3. Revolving Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Revolving Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Total Amount: [Total Amount in Words and Figures]

Per Shipment Amount: [Amount per Shipment in Words and Figures]

Validity Period: [Start Date] to [End Date]

This Revolving Letter of Credit shall automatically reinstate itself without amendment for the same amount against new shipments/drawings, not to exceed [Total Amount] during the validity period. 

Documents required for each drawing:

1. Commercial Invoice.

2. Transport Document.

3. Packing List.

Signature: __________________

[Issuing Bank's Authorized Signature]

4. Transferable Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Transferable Letter of Credit No.: [LC Number]

First Beneficiary: [First Beneficiary's Name and Address]

Second Beneficiary: [Second Beneficiary's Name and Address]

Amount: [Amount in Words and Figures]

Expiry Date: [Date]

This Letter of Credit is transferable and may be made available in whole or in part to the Second Beneficiary at the request of the First Beneficiary. Payment against presentation of specified documents as per the terms and conditions of this LC.

Signature: __________________

[Issuing Bank's Authorized Signature]

5. Irrevocable Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Irrevocable Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Currency and Total Amount in Words and Figures]

Expiry Date: [Date]

Issuing Bank: [Bank's Name and Address]

Advising Bank: [If applicable, Advising Bank's Name and Address]

Dear [Beneficiary's Name],

We hereby establish this Irrevocable Letter of Credit in your favor for the account of our client, [Applicant's Name], up to an aggregate amount of [Currency and Amount], available by your drafts drawn at sight on [Issuing Bank's Name and Address].

This Letter of Credit is valid until [Expiry Date], and payment against this LC is subject to presentation of the following documents in compliance with the terms and conditions specified herein: 

1. Signed commercial invoice in triplicate indicating LC No. [LC Number] and contract number.

2. Full set of clean, shipped on board ocean bills of lading made out to order and blank endorsed, marked "freight prepaid," and notifying [Applicant].

3. Packing list in triplicate.

4. Certificate of Origin in duplicate.

5. Any additional documents as per contract [Specify if applicable].

This Letter of Credit is irrevocable and cannot be amended or canceled without the consent of all parties, including the beneficiary.

All banking charges outside [Country of Issuing Bank] are for the account of the beneficiary unless otherwise agreed.

Please present all required documents to [Issuing Bank's Address] for payment to be effected as per the terms and conditions of this Letter of Credit.

Yours sincerely,

[Authorized Signature(s)]

[Printed Name and Title]

[Issuing Bank's Name]

CC: [Applicant's Name]

6. Confirmed Letter of Credit Template

[Letterhead of Confirming Bank]

Date: [Date]

Confirmed Letter of Credit No.: [LC Number]

Issuing Bank: [Issuing Bank's Name and Address]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Currency and Total Amount in Words and Figures]

Expiry Date: [Date]

Dear [Beneficiary's Name],

We, [Confirming Bank's Name], located at [Confirming Bank's Address], hereby add our confirmation to the Irrevocable Letter of Credit issued by [Issuing Bank's Name] under LC No. [Original LC Number], for the account of [Applicant's Name], in favor of [Beneficiary's Name].

This Confirmed Letter of Credit is available by your draft drawn at sight on us, [Confirming Bank's Name], for up to an aggregate amount of [Currency and Amount], valid until [Expiry Date].

Payment against this Confirmed Letter of Credit is subject to presentation of the following documents in compliance with the terms and conditions specified in the original Letter of Credit issued by [Issuing Bank's Name] and any amendments thereto:

1. Signed commercial invoice in triplicate indicating LC No. [Original LC Number] and contract number.

2. Full set of clean, shipped on board ocean bills of lading made out to order and blank endorsed, marked "freight prepaid," and notifying [Applicant].

3. Packing list in triplicate.

4. Certificate of Origin in duplicate.

5. Any additional documents as per contract [Specify if applicable].

All banking charges outside [Country of Confirming Bank] are for the account of the beneficiary unless otherwise agreed.

Please present all required documents to [Confirming Bank's Address] for payment to be effected as per the terms and conditions of this Confirmed Letter of Credit.

Yours sincerely,

[Authorized Signature(s)]

[Printed Name and Title]

[Confirming Bank's Name]

CC: [Issuing Bank's Name]

    [Applicant's Name]

7. Sight Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Sight Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Currency and Total Amount in Words and Figures]

Expiry Date: [Date]

Place of Expiry: [Bank's Address or Beneficiary's Location]

Dear [Beneficiary's Name],

We hereby issue this Sight Letter of Credit in your favor for the account of our client, [Applicant's Name], up to an aggregate amount of [Currency and Amount], available by your drafts drawn at sight on [Issuing Bank's Name and Address].

This Letter of Credit is valid until [Expiry Date], at [Place of Expiry], and payment against this LC is subject to presentation and verification of the following documents in compliance with the terms and conditions specified herein:

1. Signed commercial invoice in triplicate, indicating LC No. [LC Number] and contract number.

2. Full set of clean, shipped on board ocean bills of lading made out to order and blank endorsed, marked "freight prepaid," and notifying [Applicant].

3. Packing list in triplicate.

4. Certificate of Origin in duplicate.

5. Inspection Certificate issued by [Specific Inspection Company], if applicable.

6. Any additional documents as per contract [Specify if applicable].

This Letter of Credit is payable at sight, meaning that we, [Issuing Bank's Name], undertake to honor the payment immediately upon presentation and verification of the above documents, provided that all terms and conditions of the LC are met.

All banking charges outside [Country of Issuing Bank] are for the account of the beneficiary unless otherwise agreed.

Please present all required documents to [Issuing Bank's Address] for payment to be effected as per the terms and conditions of this Sight Letter of Credit.

Yours sincerely,

[Authorized Signature(s)]

[Printed Name and Title]

[Issuing Bank's Name]

CC: [Applicant's Name]

8. Deferred Payment Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Deferred Payment Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Amount in Words and Figures]

Expiry Date: [Date]

We hereby issue this Deferred Payment Letter of Credit in favor of the Beneficiary for the account of the Applicant. Payment to be made against presentation of specified documents, with payment deferred until [Deferred Payment Date].

Documents required:

1. Signed commercial invoice.

2. Transport documents.

3. Insurance certificate.

Signature: __________________

[Issuing Bank's Authorized Signature]

9. Red Clause Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Red Clause Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Amount in Words and Figures]

Advance Amount: [Advance Amount in Words and Figures]

Expiry Date: [Date]

This Letter of Credit contains a Red Clause, authorizing the paying bank to make an advance payment to the Beneficiary up to [Advance Amount] before presentation of shipping documents, against Beneficiary's simple receipt and promise to present the shipping documents at a later date.

Signature: __________________

[Issuing Bank's Authorized Signature]

10. Green Clause Letter of Credit Template

[Letterhead of Issuing Bank]

Date: [Date]

Green Clause Letter of Credit No.: [LC Number]

Applicant: [Applicant's Name and Address]

Beneficiary: [Beneficiary's Name and Address]

Amount: [Amount in Words and Figures]

Advance Amount for Warehousing: [Advance Amount in Words and Figures]

Expiry Date: [Date]

This Letter of Credit contains a Green Clause, allowing for an advance payment to the Beneficiary for warehousing costs, in addition to the pre-shipment advance provided under the Red Clause. The Beneficiary is entitled to the advance against providing warehousing receipts along with their promise to present the shipping documents at a later date.

Signature: __________________

[Issuing Bank's Authorized Signature]

Conclusion

Above is the comprehensive list of templates tailored to different scenarios. These templates are invaluable starting points for financial institutions, yet customization is essential to align with specific transaction requirements. Real-world application often involves collaboration with financial and legal experts to ensure adherence to trade laws. 

The templates herein, covering various letter of credit types, aim to facilitate smoother transactions while emphasizing the need for meticulous customization in real-world scenarios.