Letter of Credit Forum

- Does the Sale Contract look (or needs to look) different when the
payment terms are L/C? I.e. does it need to stipulate all the required
documents required to effect a payment under the L/C?

No, the Sale Contract should only mention that payment is to be effected against irrevocable L/C, documents can be mentioned but they don't need to be mentioned in any case. The importer will know how they have to look like and can stipulate them in the credit. If you are afraid of joker clauses and the like in the credit you can also stipulate that payment is to be effected against irrevocable L/C acceptable to sellers.

- Is insurance always necessary when paying via L/C, i.e. is C&F instead of CIF (and no insurance) acceptable?

Usually, insurance is not a pre-requisite for an L/C. Most L/Cs I had so far were FOB or CFR credits. However CIF is a good idea for an exporter anyhow, specially if the policy also covers an eventual return of the goods. As an importer I would care for my own insurance.

I have had a glance at the link provided by you, but it's omewhat too bulky for just glancing at it and didn't have the time to read 80 pages. Maybe it's good - I don't know. Most of us are more looking for special replies and don't want to read so much for finding one reply.

-Each long journey starts with a small step-

Best regards

Frammi

Hi!

==== ======Does the Sale Contract look (or needs to look) different when the payment terms are L/C? I.e. does it need to stipulate all the required documents required to effect a payment under the L/C?

Let's say so - it is better to have all and any terms and conditions of the forthcoming LC to be clearly stated in appropriate contract.

As You know LC and contract are separate (but connected) things.

But only the contract will  be the basis of any legal discussions/disputes, if something will go wrong.

Otherwise, basing on which You will claim for the counterpart for not fulfilling its obligations, i.e. issuance of the LC with AGREED terms and conditions?

LC to be the "mirror" of appropriate contract provisions.

================Is insurance always necessary when paying via L/C, i.e. is C&F instead of CIF (and no insurance) acceptable

Insurance document may be required under LC only when the Seller (Beneficiary) is obliged to arrange insurance IN FAVOUR OF the Buyer (Applicant). And CIF or CIP terms are only of such Inco-terms.

For any other "Incoterms" terms calling for insurance under LC is hasty and wrong.

Good luck.