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We have made a contract with a contractor. Under this contract contractor will complete the works within one year. Contractor will get their payment through LC. After signing of contract we have to issue an LC to the contractor and final LC value will be determined after completing of the works based on certified value of works. This certified value will be paid in three years.

So, I need to know what kind of LC will be it and how we will set the terms and condition of this type of LC?

If you have valuable suggestion please provide me.

Sumon

depending on the limit the bank offer you to be issued with long tenor and usance LC is suitable in this case, my thought

Hi Pal,

from your short description of the business, it seems to me more suitable a Stand By Letter of
Credit than a Documentary Credit, naturally under approval of your bank.
Other comments appreciated
Ciao