What needs to be in place for a bank to produce a letter of credit on my behalf?
I am setting up to source commodities on behalf of clients. Currently employed in an unrelated industry, I'm entering this market due to demand from contacts. As there are huge volumes involved, the transaction are likely to involve huge sums. I am hoping to remain a go-between and charge a commission for deals I help set up. Letters of credit will be required via a bank. What needs to be in place for a bank to agree to produce a letter of credit my behalf? Also, what can I do contractually to prevent the buyer and supplier from cutting me out of the deal?
Since individual banks issue their own letters of credit, take a look at the bank's letter of credit form, and you will see what specific documentation they require. Invoices, shipping arrangements, dates, times, etc.--these will all be required by the bank who issues the letter of credit.
Speak with an attorney about your contracts to make sure you're legally protected to receive the commission they've agreed to give you.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.