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Letters of Credit: Their Great Utility; How To Draft and Draw on Them; and How To Avoid Common LC Problems, Pitfalls, and Mistakes

What the rules are that govern letters of credit, where to find them, and where and to whom to look to for advice concerning them.

Most attorneys and businesses do not regularly use, prepare or review letters of credit and/or think through various issues on how to draft them, what issuer to accept, what regime (ISP or UCP) to govern them or how to properly prepare to draw on them. Many do not even know how to prepare a draft, what the rules are that govern letters of credit, where to find them, and where and to whom to look to for advice concerning them.

Letter of credit law and practice is formal, strict and based on practices which differ in significant respects from the common law and contract principles. Yet with their instant liquidity and versatility, letters of credit, if properly drafted and used, are one of the most reliable and liquid payment assurance instruments available in this world of financial uncertainty. This topic will explain these issues so an attorney or business person can spot letter of credit issues, find out where to look for help and receive baseline guidance through the issues and problems commonly encountered in letter of credit practice.


Runtime: 90 minutes
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Over 30 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

LC Foundations, Rules, Features and Facts

  • Letter of Credit Facts, Who Issues Them and How Are They Priced
  • Keys to LC Success Their Independence and Documentary Nature
  • Uses of Letters of Credit
  • Types - Commercial, Standby, Direct Pay Standby, Bank Guarantee, ICC/Swift BPO
  • Advantages and Disadvantages of LCs
  • Alternatives: Bank Guarantees, Export Insurance, Bonds, Collateral Arrangements and More
  • Common Problems, Pitfalls and Mistakes in Letter of Credit Practice and How to Avoid Them

Resources Where to Look

  • Counterintuitive and Sui Generis Nature of LCs
  • Laws and Rules That Govern LCs and LC Practice - The UCP, ISP, UCC, URDG and BPO
  • Where to Find the Rules, Source Materials, LC Forms and LC Consultants
  • ISP Model Forms of Standby Attached and Explained

LC Practice Pointers

  • Choosing a Credit-Worthy Issuer
  • Role of Advice, Confirmation, Negotiation of LCs
  • Issuer Credit Downgrade
  • Negotiating a Letter of Credit Application and Reimbursement Agreement
  • Benefits of Using the ISP vs. the UCP in Standbys
  • Avoiding Bankruptcy Issues
  • Drafting Draw Conditions (Triggers)
  • Avoiding Impossibility, Nondocumentary Conditions, Ambiguities
  • Automatic Extension Clauses
  • Commercial Letters of Credit
  • Drawing on an LC
  • Extend, Replace or Draw Provision
  • Force Majeure Events
  • Cancelling an LC
  • Transferring a Letter of Credit
  • Assigning Letter of Credit Proceeds
  • Taking Security Interests in LC Proceeds
  • Enjoining Draws on a Letter of Credit
  • Jurisdiction and Venue Issues
  • Attorneys' Fees
  • Letter of Credit Scams
  • Supersedeas (Appeal Bond) Letters of Credit
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Why Lorman?

Over 30 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

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OnDemand Webinar

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Audio & Reference Manual

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Why Lorman?

Over 30 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Carter H. Klein

Carter H. Klein

Jenner & Block LLP

  • Partner in Jenner & Block LLP's Chicago office
  • Concentrates practice on Uniform Commercial Code work, secured and unsecured lending, asset sales and purchases, trade finance, outsourcing, payments, financial services and regulation, and credit enhancements and workouts; corporations, businesses, banks and other financial institutions seek his counsel on funds transfers, sales and acquisitions, and financial and international transactions work
  • Extensive experience with Article 5 of the Uniform Commercial Code Letters of Credit
  • Frequent lecturer on letters of credit
  • J.D. degree, Order of the Coif, First in Class, University of Illinois College of Law; B.A. degree, with the highest distinction, University of Illinois at Urbana-Champagne
  • Can be contacted at 312-923-2950 or [email protected]
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Product ID: 397493
Published 2016
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