Using the ISP98 Model Forms for Standby Letters of Credit

Why Should You Attend:

A majority of standby letters of credit are subject, by their terms, to the International Standby Practices (“ISP98”), a body of rules and practices designed for making standby letters of credit dependable instruments for the purposes they serve. Yet, this is an area that is poorly understood by the companies using these instruments and the lawyers who represent them, leading to the use of unnecessarily complicated and sometimes unworkable language rather than relying on ISP98 provisions.

In June 2013, the Institute for International Banking Law and Practice, the group that created the ISP98, released a set of eight model forms for use in drafting letters of credit that are subject to the ISP98. The model forms, together with annexes and end-notes explaining their use, elegantly demonstrate how various, common situations can be dealt with.

This webinar will acquaint participants with the ISP98 Model Forms and thereby prepare them to structure letters of credit that comply with the provisions of the ISP98. The program will focus on how and when to use the model forms to accomplish such objectives as automatic extensions, automatic reductions, transfer of drawing rights, confirmation, and arranging local guarantees.

Agenda:

1. How do standby letters of credit work?
2. What is the ISP98?
3. What is the purpose of the ISP98 Model Forms?
4. A walk through the Model Forms
5. Variations and pointers described in the end-notes

Learning Objectives:

• Understand the bare essential requirements for a well-written letter of credit
• Explore repercussions of poor language
• Develop templates and boiler-plates for use in common situations
• Learn about variations in the ISP98 Model Forms to adapt them to complex situations

Areas Covered in the Webinar:

• Form 1: Model Standby Incorporating Annexed Form of Payment Demand with Statement
• Form 2: Model Standby Providing for Extension and Incorporating Annexed Form of Payment Demand with Alternative Non-Extension Statement
• Form 3: Model Standby Providing for Reduction and Incorporating Annexed Form of Reduction Demand
• Form 4: Model Standby Providing for Transfer and Incorporating Annexed Form of Transfer Demand
• Form 5: Simplified Demand Only Standby
• Form 6: Model Counter Standby with Annexed Form of Local Bank Undertaking
• Form 7: Model Standby Requiring Confirmation
• Form 8: Model Confirmation of Standby

Who Will Benefit:

• Treasury department employees
• Credit and collection managers
• Company presidents and CFOs
• Company vice presidents
• Business owners
• Sales managers
• Attorneys
• Accountants
• Bankers
• Companies involved in reinsurance, commodities trading, engineering, arranging financing
• Anyone who uses standby letters of credit

Buddy Baker
Managing Director, Global Trade Risk Management Strategies

Walter Baker brings more than 30 years of experience in international trade finance to his current position as vice president and head of global trade solutions delivery for Fifth Third Bank. Fifth Third is one of the 20 largest banks in the US and provides a full range of risk mitigation and financing products for domestic and international trade. His professional experience includes earlier stints with Atradius Trade Credit Insurance, ABN AMRO Bank, Bank of America, Wachovia Bank, and The First National Bank of Chicago.

Mr. Baker is a recognized expert in trade finance and makes frequent presentations for national associations of exporters, importers, bankers, and lawyers. He designed the online training/certification programs used by the Association of International Credit and Trade Finance Professionals (ICTF) and by the Association of Trade and Forfaiting in the Americas (ATFA) and the trade finance sections of the certification program used by the Finance, Credit and International Business Group (FCIB) of the National Association of Credit Management (NACM). Mr. Baker has authored numerous magazine articles, and the books: Users’ Handbook to Documentary Credits under UCP600, Documentary Payments & Short-Term Trade Finance, and The Regulatory Environment of Letters of Credit and Trade Finance. He serves as a member-at-large of the National Letter of Credit Committee of the Bankers’ Association for Finance and Trade/International Financial Services Association and is actively involved in establishing national and worldwide standard practices for LCs, such as the current version of the Uniform Customs and Practice for Documentary Credits (referred to as UCP600), the official ICC guide for examining letter of credit documents, called the International Standard Banking Practices for the Examination of Documents under Documentary Credits (ISBP), the eUCP supplement to the UCP dealing with electronic documents, the International Standby Practices (ISP98), and Article 5 of the Uniform Commercial Code.

Mr. Baker also serves on the board of directors of the Association of International Credit and Trade Finance Professionals (ICTF), a multinational association of export credit managers, on the advisory council of the Institute for International Banking Law and Practice, and on the council of International Standby Practices. He earned his undergraduate degree at Yale University and his MBA at Northwestern.

Topic Background:

Letters of credit are commonly used in business transactions to ensure payment and performance by the parties. Over $600 billion of standby letters of credit are currently outstanding in the US marketplace. The transactions they support can be complex, leading to concern that the letters of credit be properly worded.

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