DLC verbiage: how to check a draft letter of credit before it is issued
By the Vanguard Verify desk · Published 2026-10-24 · Updated 2026-10-24
Short answer: DLC verbiage is the draft wording of a documentary letter of credit that the buyer's bank will send as a SWIFT MT700. The seller should check every field against the signed contract before issuance, make sure the credit is subject to UCP 600, and reject any clause the seller cannot comply with on its own documents. After issuance, confirm authenticity only through your own advising bank.
Most LC problems are not fraud. They are clauses nobody checked: a document the seller cannot obtain, a shipment date that has already slipped, or an expiry place in the buyer's country. Under UCP 600 banks deal with documents, not goods (Article 5), so a credit you cannot comply with on paper is a credit that may never pay.
Step-by-step check of the draft
- Match the contract. Put the SPA or signed contract beside the draft. Commodity, quantity, unit price, total amount, tolerance and Incoterm must agree exactly.
- Check the applicable rules. The MT700 field for applicable rules should state UCP latest version (UCP 600). A credit with no stated rules, or invented rules, is a warning sign.
- Read the description of goods (field 45A). Keep it short and matching the contract. Long technical specifications create discrepancy risk.
- List every document required (field 46A). For each one ask: who issues it, can I get it in time, and will its wording match? Typical sets include commercial invoice, full set of clean on-board bills of lading, certificate of origin, inspection certificate, packing list and insurance document where the term is CIF or CIP.
- Read additional conditions (field 47A). This is where unworkable clauses hide.
- Check dates. Latest date of shipment (44C), expiry date and place (31D) and presentation period (48). If no period is stated, UCP 600 Article 14(c) applies the 21-day limit after shipment, and never later than expiry.
- Check availability and confirmation. Field 41a states where and how the credit is available (sight payment, deferred payment, acceptance, negotiation). Field 49 shows whether confirmation is requested. See confirmed letter of credit explained.
- Agree the final draft in writing before the buyer instructs the bank, then wait for the real MT700 through your advising bank.
Clauses to push back on
| Clause | Why it is a problem | Ask for |
|---|---|---|
| Inspection certificate "signed by applicant" | The buyer can block payment by refusing to sign | Independent inspection company certificate |
| Expiry place in applicant's country | Your documents must arrive there in time | Expiry at your bank / counters of the nominated bank |
| Credit "operative only upon" a later notice | Not a usable credit until the buyer acts | Operative credit on issuance |
| Shipment date too close | Late shipment makes documents discrepant | Realistic date with margin |
| Non-documentary conditions | UCP 600 Article 14(h) says banks disregard them, which creates confusion | Turn the condition into a named document or remove it |
Red flags
- The "bank" sends the credit by email or PDF only, with no MT700 arriving at your advising bank.
- The applicant demands a fee, POP or performance bond from you before showing any draft.
- The issuing bank cannot be matched to a real, licensed bank and SWIFT BIC.
- The draft is labelled "DLC" but the wording reads like an SBLC or an MT799 "pre-advice". Read DLC MT700 explained.
- Pressure to accept the draft "as is" today.
Remember the normal order: the buyer shows proof of funds (POF) and opens the credit; the seller shows proof of product (POP). A seller should not pay to receive an LC.
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FAQ
What does DLC verbiage mean?
It is the draft wording of a documentary letter of credit, agreed between buyer and seller before the buyer's bank issues the credit by SWIFT MT700.
Which rules should a DLC follow?
Most commercial credits are issued subject to UCP 600, the ICC Uniform Customs and Practice for Documentary Credits. The applicable rules field in the MT700 should say so.
How long do I have to present documents?
The period stated in the credit. If none is stated, UCP 600 Article 14(c) applies a maximum of 21 calendar days after shipment, and not later than the expiry date.
How do I know the issued LC is real?
Receive it through your own advising bank, which checks apparent authenticity under UCP 600 Article 9. Do not rely on emailed PDFs.
Vanguard Verify is run by Vanguard Trade Capital Goods Wholesalers DWC-LLC, Dubai South, Licence 14282. This answer is general information, not legal or financial advice.