Fill in a Valid Irrevocable Documentary Credit Template

An Irrevocable Documentary Credit, often referred to as a letter of credit, is a payment mechanism used in international trade that guarantees payment to the beneficiary as long as the stipulated terms and conditions are met. This type of credit cannot be revoked or modified without the consent of all parties involved, providing a secure environment for both buyers and sellers. Ready to proceed with your application? Fill out the form by clicking the button below.

Jump Links

The Irrevocable Documentary Credit form is a vital tool for businesses engaged in international trade. It offers a secure method for making payments to suppliers, ensuring that funds are only released when agreed conditions are met. This form typically includes crucial details such as the application date, parties involved, and the terms of the transaction. Applicants must provide their details, along with those of the beneficiary and any relevant banks. The form outlines the amount of the credit and the currency used, as well as specific instructions for disbursement. It specifies whether partial shipments, transhipments, or confirmatory arrangements are allowed and includes deadlines for documentation submission. Additionally, it details required documents like commercial invoices and packing lists, ensuring the receipt of goods is properly documented. Understanding how to fill out this form accurately can streamline the transaction process and mitigate risks for both parties involved. Through careful adherence to the application’s parameters, businesses can protect their interests effectively in the complex landscape of global trade.

Irrevocable Documentary Credit Example

1. Date of application

Application for Irrevocable Documentary Credit (DC)

Branch

To: HSBC Bank (China) Company Limited,

This is an application for the trade service(s) specified below.

Complete the required information and provide any instructions related to the trade service(s).

2.1 Applicant Name (the Customer)

2.2 Applicant Address

2.3 Applicant Contact Person

2.4 Applicant Tel	2.5 Import Account No. (if known)

3.DC Number (if known)

4.2 Beneficiary Address

4.1 Beneficiary Name

4.3Beneficiary Contact Person

4.4Beneficiary Tel

5. DC Dispatched by

4.5 Beneficiary Fax	Teletransmission	Courier	Collection at counter
	Teletransmission	Courier	Collection at counter

	(Air)mail (	With brief advice by teletransmission)

6.1 DC Currency

6.3 DC Amount & Currency (in Words)

6.2 DC Amount (in Figures)

6.4 Expiry Date

D D M M Y Y Y Y

6.5 Expiry Place

6.6 Partial Shipments

	Allowed	Not Allowed
6.10 DC available with
	Any Bank /	Advising Bank /	Issuing Bank
6.13 DC Tenor
	Sight or	Tenor		days from

6.7 Allowance in DC

6.8 Allowance in

6.9 Confirmation

amount +/- %

Quantity +/- %

Yes

6.12 Drafts Required

6.11 Transhipments

Allowed

Not Allowed

Yes

6.14 DC available by

6.15 Transferable

Negotiation /

Acceptance /

Yes

Sight payment /

Deferred payment

6.15 Period for presentation of documents Documents to be presented within		days after the date of shipment but within the
the validity of the DC.

7.1 Advising Bank SWIFT code (if known)	7.3 Advising Bank Address

7.2 Advising Bank Name

GTRF-CN-DC-001-Sep-17

Reset

Validate

8. Description of Goods (without excessive detail)

9.1 Place of Taking in Charge/Receipt

9.2 Port of Loading/Airport of Departure

9.3 Port of Discharge/Airport of Destination

9.4. Place of Final Destination/Place of Delivery

9.5 Latest date of Shipment

9.6 Incoterms

EXW

FCA

FOB

CFR

9.7 Insurance to be covered by

CIF

CPT

CIP

DDP

Ultimate Buyer

Applicant

Other

HSBC to arrange insurance for us at our cost with an insurance company (including any HSBC Group member) acceptable to HSBC.

HSBC is authorised to debit our Account No.

for the insurance premium once the policy is effected at the rate agreed.

Insurance already/will be arranged by us.

Documents required

10.1 Signed commercial invoice in

originals

copies.

10.2 Packing List in

originals

copies.

10.3

For shipment by sea, full set original clean “On Board”

bills of lading or

multimodal or combined transport document made out to

the order of shipper and endorsed in blank; or

marked: “Freight

Prepaid” or

“Collect” and “Notify

”

mentioning the DC number.

10.4

For shipment by air, original Air Waybill marked “For the consignor/shipper” signed by the carrier or his agent, marked:

“Freight

Prepaid or

Collect” showing flight number and date of despatch of goods, consigned to

and “Notify

”

mentioning the DC number.

10.5

Cargo Receipt issued and signed by the authorised signatory of Applicant (whose signature(s) must be in conformity with the

record held in the Issuing Bank’s file) certifying that the Goods have been received in good order and condition, mentioning the DC

number, date of receipt of the Goods, total value and quantity and description of Goods received.

Delivery Order

10.6

Marine/

Air Insurance Policy or certificate in negotiable form and blank endorsed for full CIF/CIP value plus 10% covering )

Institute Cargo Clauses –(

(A)/

Air),

Institute War Clauses - (

Cargo/

Air Cargo),

Institute Strikes Clauses -(

Cargo/

Air Cargo);

evidencing claims payable at destination in the currency of the DC.

10.7

Beneficiary’s certificate certifying that one set of shipping documents has been sent to applicant within

day(s)

after shipment.

GTRF-CN-DC-001-Sep-17

10.8 Additional Conditions / Other Documents required.

Reset

Validate

Charges to be paid by (A)Applicant/(B)Beneficiary

11.1

DC Opening Commission

11.5 Transit interest charges

11.2

Issuing bank other charges

11.6 Delayed reimbursement commission for

usance DC only

11.3

Correspondent bank charges

11.4

DC confirmation charges (if applicable)

11.7 Bill Commission in Lieu of Exchange

12. Account No. for charges

(Currency

; A/C

Current /

Savings).

13. Back to Back DC

This application is for a back-to-back DC to be issued against the master credit No.

issued by

(the “Master DC”). The original Master DC is

enclosed /

being held by HSBC.

14.Settlement instruction (if applicable)

Settle all amounts owing by the Applicant under this application by:

Account Debit. Debiting to account number
currency	A/C:	Current /	Savings ; for settlement.

Master DC proceeds. Using the proceeds received by HSBC under the Master DC or any financing amount obtained by the Applicant in relation to the Master DC.

Loan. Drawing a buyer loan for		days.

Export transaction proceeds. Using the proceeds received by HSBC under the export trade transaction handled by HSBC or any financing amount obtained by the Applicant in relation to such export trade transaction.

Bill No./DC No.

for settlement.

Other (specify)

15.Additional Information and Instructions

16.Type of Trade

We refer to HSBC’s Standard Trade Terms (as amended from time to time) which can be accessed, read and printed by the Customer at/ from www.gbm.hsbc.com/gtrfstt or alternatively the Customer can request a copy from its Relationship Manager (the Standard Trade Terms)

This application incorporates and is subject to the Standard Trade Terms as though they were set out in full in this application, and together they form an important agreement.

By signing this application, the Customer:

yy irrevocably requests HSBC to provide the above trade service(s) in accordance with the instructions in this application; and

yy confirms that it has read and understood the Standard Trade Terms and agrees that this application incorporates the Standard Trade Terms and that the Standard Trade Terms applies to the above requested trade service(s).

Signed for and on behalf of the Customer:

Authorised Signatories and Company Chop

Reset
Reset		Validate

GTRF-CN-DC-001-Sep-17

Click for Irrevocable Documentary Credit File

File Breakdown

Fact Name	Description
Date of Application	The Irrevocable Documentary Credit form requires the applicant to specify the date of application in the format D D M M Y Y Y Y.
Applicant Information	Essential details include the applicant’s name, address, contact person, and telephone number, ensuring clear communication channels.
Beneficiary Details	The form requires similar information for the beneficiary, maintaining consistency in the documentation process.
DC Amount Specification	Applicants must indicate the currency and amount of the documentary credit both in figures and in words, providing clarity on the financial commitment.
Incoterms Inclusion	The form includes a section to specify applicable Incoterms, which are crucial for defining the responsibilities of buyers and sellers during the shipping process.
Insurance Arrangement	Opting for either the applicant or HSBC to arrange insurance as part of the credit function is a critical part of risk management in the transaction.
Governing Law	The governing law typically follows the jurisdiction of the issuing bank, which influences the interpretation and enforcement of the credit terms.

Guide to Using Irrevocable Documentary Credit

Completing the Irrevocable Documentary Credit form requires careful attention to detail. Each section plays a vital role in ensuring that all necessary information is accurately captured for processing. This form may seem overwhelming at first, but breaking it down step by step can make the process much smoother.

Begin with the **Date of Application**, entering it in the format D D M M Y Y Y Y.
Fill in the **Applicant Name**, which is the name of the customer.
Enter the **Applicant Address** to identify where the applicant is located.
Add the **Applicant Contact Person**; this should be someone who can be reached for further information.
Include the **Applicant Tel** for direct communication.
If known, provide the **Import Account No**.
Input the **DC Number**, if applicable.
Provide the **Beneficiary Name**—the party to receive the credit.
Enter the **Beneficiary Address** for clarity on where the credit will be sent.
Add the **Beneficiary Contact Person** and their **Telephone Number**.
Select how the **DC will be dispatched**: Teletransmission, Courier, Collection at counter, or (Air)mail.
Indicate the **DC Currency** that will be used.
Specify the **DC Amount** both in figures and in words.
Set the **Expiry Date** for the credit, formatted as D D M M Y Y Y Y.
Define the **Expiry Place** where the credit will be valid.
Select if **partial shipments are allowed**. Choose between Yes or No.
Specify the **DC availability** with respect to banks (Any Bank, Advising Bank, Issuing Bank).
Indicate the **DC Tenor**—whether it is Sight or Tenor days from a specified event.
Input amounts for **allowance in DC**, specifying any percentage changes.
Provide details on **drafts required**—choose Yes or No.
Select if **transshipments are allowed**. Mark as Yes or No.
Clarify if the **DC is transferable** and by which method (Negotiation/Acceptance/Sight Payment/Deferred Payment).
Indicate the **period for presentation of documents**, stating the number of days allowed after shipment.
Input the **Advising Bank SWIFT code**, if known.
Add the name and address of the **Advising Bank**.
In the **Description of Goods**, write briefly without excessive detail.
Complete the **Place of Taking in Charge** and shipping location details (Port of Loading/Airport of Departure and Port of Discharge/Airport of Destination).
Specify the **Place of Final Destination** and the **Latest Date of Shipment**.
Choose the applicable **Incoterms** for the shipment.
Indicate who will cover insurance—either the **Ultimate Buyer**, the **Applicant**, or if HSBC will arrange it.
List the **Documents Required** for the trade, ensuring each is specified accurately.
Identify who will pay the charges related to the credit (Applicant or Beneficiary) for each charge type (Opening Commission, Other Charges, etc.).
Fill in the **Account Number for Charges** for direct debit, including the type of account (Current/Savings).
Specify if this application is for a **Back-to-Back DC**, and include the details of the master credit if applicable.
Add any **Settlement Instructions** as needed, including methods of settlement.
Provide any **Additional Information and Instructions** that might be relevant.
Lastly, sign the application, confirming acceptance of the terms and authorize the submission on behalf of the customer.

By following these steps diligently, the form can be filled out accurately, enhancing the chances of a successful application. Make sure to review each section before submission to avoid any unexpected delays.

Get Answers on Irrevocable Documentary Credit

What is an Irrevocable Documentary Credit?

An Irrevocable Documentary Credit is a financial instrument used in international trade to guarantee payment to the beneficiary, typically the seller, once specific conditions are met. This means that once it is issued, it cannot be altered or canceled without the agreement of all parties involved. It assures the seller of payment while providing the buyer with secure terms for shipment and delivery of goods.

How do I complete the application form for an Irrevocable Documentary Credit?

To fill out the application form, follow these steps:

Begin with the date of application.
Provide your details as the applicant, including your name, address, contact person, and contact number.
Identify the beneficiary's details: their name, address, and contact information.
Specify the details of the documentary credit, including the amount, currency, expiry date, and whether partial shipments are allowed.
Outline the shipping conditions, such as the description of goods, shipment dates, and transportation methods.
List any required documents to accompany the shipping, like the commercial invoice and packing list.

What documents are typically required for an Irrevocable Documentary Credit?

The documentation needed varies based on terms but generally includes:

Signed commercial invoice (originals and copies)
Packing List (originals and copies)
Original clean “On Board” bills of lading or Air Waybill
Cargo Receipt signed by an authorized person from the applicant
Marine/ Air Insurance Policy
Beneficiary’s certificate of document dispatch

What is the significance of the expiry date on the documentary credit?

The expiry date is essential as it defines the time frame in which the beneficiary must present the necessary documentation to the bank for payment. If the documents are not presented by the expiry date, the credit becomes invalid. Therefore, both parties must be aware of this date to ensure compliance and timely payment.

Can I request partial shipments under an Irrevocable Documentary Credit?

Yes, partial shipments can be allowed or disallowed based on the terms set in the documentary credit. It is important to indicate your preference clearly in the application form. Allowing partial shipments can provide flexibility in delivery but may complicate documentation and accounting for payments.

What is the role of the Advising Bank?

The Advising Bank acts as an intermediary that communicates the terms of the Irrevocable Documentary Credit to the beneficiary. This bank verifies the authenticity of the credit and adds its confirmation, which also assures the beneficiary regarding payment reliability. Its involvement adds an additional layer of security for both parties.

What happens if there are discrepancies in the shipping documents?

Any discrepancies between the shipping documents and the terms outlined in the Irrevocable Documentary Credit may lead to non-payment or payment delays. Banks are obligated to follow the strict terms of the credit, so it's crucial to ensure all documents are accurate and match the requirements specified in the credit.

How does insurance work within the context of the Irrevocable Documentary Credit?

Insurance can be arranged by the seller or the bank. If the bank is to arrange it, indicate this clearly in the application, as costs will be charged to your account. Insurance policies must cover the goods for the correct value and risks during transport. It’s advisable to review the insurance arrangements to ensure they meet the documentary credit requirements.

Common mistakes

Filling out the Irrevocable Documentary Credit form can be a complex process. Many individuals make common mistakes that can delay transactions or lead to additional costs. One typical error occurs when applicants incorrectly enter the expiry date. The precision of this date is crucial. If the expiry date is incorrect or omitted, the credit may become invalid, leaving the applicant and beneficiary in a challenging situation.

Another frequent mistake relates to the beneficiary's information. This includes the beneficiary's name, address, and contact details. If any of this information is entered incorrectly, it complicates the process. The bank may reject documents if the beneficiary is not accurately identified, leading to unnecessary complications and delays.

Additionally, applicants often miscalculate the amount and currency fields. Writing an amount in figures that does not match the written amount causes confusion. These discrepancies can lead to a rejection of the document by banks or further administrative challenges.

Providing insufficient or excessive detail in the description of goods is another common pitfall. The description should be clear but not overly complicated. An overly vague description may not meet the requirements, while excessive detail might confuse reviewers or lead to compliance issues.

Many people fail to account for insurance requirements in the form. It is essential to specify whether insurance is to be arranged by HSBC or if the applicant has their own arrangements. Not addressing this can result in unexpected expenses or complications during shipment.

Finally, inaccuracies in the contact information for the applicant can create problems. If the contact details are wrong, delays in communication can occur. This becomes particularly problematic in urgent transactions. These simple oversights can significantly affect the efficiency of processing the documentary credit.

Documents used along the form

The Irrevocable Documentary Credit form is a crucial document in international trade, often accompanied by several other forms and documents that facilitate the transaction. The following is a list of essential documents commonly used alongside it, each serving a specific purpose in the trade process.

Commercial Invoice: This document is issued by the seller and outlines the goods sold, their quantities, prices, and terms of sale. It serves as a bill for the transaction and is important for customs clearance.
Packing List: Accompanying the commercial invoice, this list details how the goods are packed, including dimensions and weight. It aids customs officials in understanding the shipment's contents.
Bill of Lading: A legal document issued by the carrier, this serves as a receipt for the goods and a contract for transportation. It specifies the destination and can be negotiable, allowing ownership of the goods to be transferred.
Air Waybill: Used for air shipments, this document functions similarly to a bill of lading. It confirms that the carrier has received the goods and outlines terms of transport, including freight payment details.
Cargo Receipt: Issued by the applicant, this document confirms the receipt of goods in good condition. It also ties back to the documentary credit by including important transaction details.
Insurance Policy: This document provides evidence that the cargo is insured during transit. It outlines coverage details and is crucial for managing risk in international shipments.
Beneficiary’s Certificate: The beneficiary provides this certificate to confirm that shipping documents have been sent to the applicant. It is typically submitted after shipment to maintain compliance with the credit terms.
Additional Documents: These may include certificates of origin, export licenses, or other requirements specific to the transaction or destination country. They ensure compliance with legal and regulatory standards.

Understanding these additional documents can help ensure smooth processing and compliance during international trade transactions. They collectively work to provide security and clarity for all parties involved in the trade, enhancing operational efficiency.

Similar forms

The Irrevocable Documentary Credit form shares similarities with several other financial and commercial documents. Below are eight such documents and how they relate to the Irrevocable Documentary Credit:

Letter of Credit (LC): Like the Irrevocable Documentary Credit, a Letter of Credit serves as a guarantee from a bank that a seller will receive payment on time and for the correct amount, provided they meet the specified conditions.
Bill of Lading: This document functions as a receipt for goods and a document of title. Similar to the Documentary Credit, it facilitates international shipping by detailing the terms of transport and ownership transfer.
Commercial Invoice: A Commercial Invoice provides details about the goods sold and is essential for customs clearance. It parallels the Irrevocable Documentary Credit, as it outlines the financial terms and an itemized list of goods, which must align with the credit requirements.
Packing List: This document lists the contents of a shipment, similar to the Irrevocable Documentary Credit, which requires a description of goods. Both documents are critical during shipping and customs processes.
Insurance Policy: An Insurance Policy protects against potential loss or damage of goods in transit. Like the Documentary Credit, it addresses risk management during international trade transactions.
Letter of Guarantee: This is a promise made by a bank or financial institution to cover a loss if a party fails to fulfill contractual obligations. It shares the same assurance aspect as the Irrevocable Documentary Credit.
Proforma Invoice: A Proforma Invoice serves as a preliminary bill of sale. It functions similarly to the Irrevocable Documentary Credit by defining terms of sale before actual shipment or payment.
Certificate of Origin: This document certifies the country in which goods were manufactured. It is critical in international trade and complements the use of an Irrevocable Documentary Credit by validating product identity and origin.

Dos and Don'ts

When filling out the Irrevocable Documentary Credit form, certain practices can significantly impact the application’s success. Here is a list of essential dos and don'ts to consider:

Do ensure that all sections of the form are filled out completely and accurately.
Do double-check the applicant and beneficiary information for any typing errors.
Do clearly specify the currency and amount in both figures and words to avoid misunderstandings.
Do include all necessary documents as outlined in the requirements section.
Do specify the correct expiry date and place to ensure timely processing.

Don't leave any fields blank; missing information can lead to delays.
Don't forget to sign the application; an unsigned form is typically invalid.
Don't overlook the importance of adhering to the Standard Trade Terms mentioned in the application.
Don't assume that verbal instructions will suffice; written details are crucial.

By following these guidelines, you can simplify the application process and minimize the likelihood of rejections or delays.

Misconceptions

All Irrevocable Documentary Credits are the same. Many believe that all credits have identical terms and conditions. However, specifics can vary significantly based on individual agreements, the banks involved, and the nature of the transaction. Each credit is tailored to the particular needs of the client and the circumstances surrounding the trade.
Once issued, an Irrevocable Documentary Credit cannot be changed.This is a common misconception. While it is challenging to alter an issued credit due to its irrevocable nature, amendments can be made with the mutual consent of all parties involved. It’s crucial to understand that communication between the parties is key to facilitating any changes.
Irrevocable Documentary Credits guarantee payment. Some people assume that these credits ensure payment without fail. While they provide a significant level of security, payment is only guaranteed if the required documents are presented correctly and in accordance with the terms outlined in the credit. Failure to present these documents appropriately can result in non-payment.
An Irrevocable Documentary Credit can be relied upon without further checks. A misconception exists that having this credit means sellers can blindly trust the buyer’s bank. However, sellers should still perform due diligence. It’s essential to understand that the bank’s obligation is limited to examining the documents and not the actual goods being sold.

Key takeaways

When filling out and using the Irrevocable Documentary Credit (DC) form, keep these key takeaways in mind:

Ensure Complete Information: Provide full and accurate details for both the applicant and the beneficiary, including names, addresses, and contact information.
Define Clearly: Specify the DC amount, currency, and expiry date to avoid any confusion later. This also includes whether partial shipments are allowed.
Understand Responsibilities: Clarify who is responsible for various charges, as this can significantly impact financial outcomes.
Review Required Documents: Make sure you know the documents needed for the shipment. Missing documents can lead to delays or refusals.
Specify Insurance Instructions: Clearly state who will cover the insurance costs. Check if you want HSBC to arrange it or if you will handle it yourself.
Adhere to Presentation Timeline: Documents should be presented within the specified days after shipment, but also within the validity of the DC.
Consult Standard Trade Terms: Familiarize yourself with HSBC's Standard Trade Terms, as they are crucial to understanding your commitments under the application.