ISP98 Form 5 - Simplified Demand Only SBLC

Introduction & How to Use:

ISP98 Model Form 5 is a template for a simple Demand Only Standby Letter of Credit (SBLC).

The download links below offer a fillable Word file that can be edited, copied, or modified as you want for use in your systems. The second item also has the template, but includes explanations and annotations to aid the specialist to understand how to use this Form.

Further explanation of this Form is available at the bottom of this page.

📄 Download Fillable, Customizable Forms:

• Download the Fillable ISP98 Model Form 5 (MS Word file)
• Download the Annotated ISP98 Model Form 5 (MS Word file)

Preview:

Demand Only Standby:

[name and address of beneficiary]
[date of issuance]

On the application of [name and address of applicant], we, [name and address of issuer], issue in your favour this standby letter of credit No. [number] subject to the International Standby Practices 1998 (ISP98) (ICC Publication No. 590) [[1]] in the amount of [currency/amount], payable[[2]] against presentation of your demand[[3]] to us at [address of place for presentation][[4]] on or before [date][[5]].

                                                                        [Issuer’s name]

                                                                         ____________________
                                                                        [Name of Authorized Signer]
                                                                        [Title of Authorized Signer]

About the ISP98 Model Forms

Produced by the Institute of International Banking Law & Practice, the ISP98 Model Forms are designed to help standby users, including their regulators, to develop sound, workable, and appropriate texts for standbys in light of specialized standby practices and laws worldwide and can also be used for demand guarantees subject to ISP98.

These forms are fillable, editable, and ready to use.

See All ISP98 Model Forms

ISP98 Official Commentary

Rule by rule analysis, comparison, and recommendations for the ISP

Read it Here

Copyright © 2024 by the Institute of International Banking Law & Practice, Inc., www.iiblp.org (“IIBLP”).  Unlimited permission is hereby granted to copy and use this ISP98 form, including endnotes, for all purposes except publication for a charge to a purchaser or subscriber.

Additional Information on ISP98 Model Form 5

This is a form of simplified demand only standby.  It relies on the incorporated ISP98 Rules to fill gaps, particularly as to the form of demand required to obtain honour.  The endnotes to this form identify the gap-filling Rules.

This ISP98 Form 5 is intended to show that a simplified form of standby calling for a demand only is feasible.  See ISP98 Form 1 (Model Standby Incorporating Annexed Form of Payment Demand (with Statement) for a more self-contained model standby with more extensive endnotes.

This form is published for educational purposes and not as legal or professional advice.  Potential users should consult with their own advisers in the drafting or use of a standby letter of credit.  ISP98 and letter of credit educational and training materials, including The Official Commentary on the International Standby Practices containing official interpretations of ISP98, are available from IIBLP at a cost, or free to DCW subscribers.

[[1]]: Incorporation of ISP98.  ISP98 Rule 1.06 provides that an ISP98 standby is “an irrevocable, independent, documentary, and binding undertaking when issued and need not so state”.  It is thus unnecessary for an ISP98 standby to recite that it is enforceable without regard to the validity of any claim of performance or non-performance in the underlying transaction.  It is unnecessary to add a recital (including an "integration" or “merger” clause) that would deny or limit the effect of any document or other matter mentioned in the standby or of any negotiations leading up to or following standby issuance.  Such clauses and recitals risk limiting the various ISP98 rules that provide for the standby’s independence.

[[2]]: Honour by payment.  ISP98 Rules 2.01 (Undertaking to Honour by Issuer and Any Confirmer to Beneficiary) and 5.01 (Timely Notice of Dishonour) provide that an issuer undertakes to honour a complying presentation and that an issuer has at least three, but not more than seven, business days after presentation either to pay or send a notice of dishonour.

[[3]]: Presentation of demand.  This ISP98 Form 5 requires presentation of a demand but, unlike ISP98 Forms 1-4, this simplified standby does not describe or annex a required form of demand.  ISP98 Rule 4.16 (Demand for Payment) requires that a demand for payment identify the standby as indicated in Rule 3.03 (Identification of Standby), state the amount demanded, be from the beneficiary and directed to the issuer, and be dated and signed as indicated in Rule 4.16 (Demand for Payment).  ISP98 does not require that a demand be in the form of a “draft” or “bill of exchange” or include any other statement or be accompanied by any other document.  ISP98 Rule 3.08 (Partial Drawing and Multiple Presentations; Amount of Drawings) provides that a beneficiary has the right to present partial and multiple demands.  A beneficiary preparing a demand under this simplified form of standby could simplify the wording in the annexed demand form in ISP98 Form 1.

[[4]]: Complying presentation.  To the extent that a standby that fails to state where, how, and to whom presentation must be made, ISP98 Rules 3.04 (Where and to Whom Complying Presentation Made) and 3.06 (Complying Medium of Presentation) apply.  Those rules generally require physical presentation of a paper document to the issuer but allow a beneficiary that is a bank or SWIFT participant to present a demand using SWIFT or other similar authenticated means.

[[5]]: Expiration.  Standbys must provide for their termination under ISP98 Rule 9.01 (Duration of Standby) and likely also under applicable commercial  law and banking regulations.  This form of standby is based on the common practice of stating a specific calendar date as the expiration date, i.e., the latest date for presentation.  ISP98 Rules 3.13 (Expiration Date on a Non-Business Day) and 3.14 (Closure on a Business Day and Authorization of Another Reasonable Place for Presentation) provide for an extension if the place for presentation is closed on that date.