---
title: "14 \u2014 Record the Buyer's LC / Contract Terms"
space: "Setup Guide"
url: "https://jmtradelink.com/setup/14-contract-term"
updated: "2026-07-13"
---

When the buyer's bank opens a Letter of Credit — or you agree a CAD (cash-against-documents) contract — every detail in that document is a promise you must keep: which papers to present, how many copies, by which dates. The **Contract Term** record is where you type that promise in once. From then on the system carries it for you: when you raise the export invoice, the required documents and verification checkpoints attach themselves as a checklist, and the invoice refuses to go out until every box is ticked.

## Before you start

- You have a **submitted Sales Order** for the deal — created in [Price It, Quote It, Win It](/setup/10-quote-and-win). The Contract Term is built from it.
- Keep the buyer's LC (or contract) in front of you — you will copy its numbers and dates field by field.

How the record fits into the flow:

```mermaid
flowchart LR
    lc["Buyer's bank opens the LC\n(or CAD contract agreed)"] --> ct["Contract Term\nLC details + required documents\n+ verification checkpoints"]
    so["Submitted Sales Order"] -->|"Create > Contract Term"| ct
    ct -->|"auto-attaches as a checklist"| si["Export Invoice\n(next section)"]
```

## Steps

### 1. Create the Contract Term from the Sales Order

1. Open the deal's Sales Order (from **Sales Order** under **Sales & Procurement** in the **Export Management** sidebar, or type its number in the search bar at the top).
2. At the top right, open the **Create** menu and click **Contract Term**.

![Create menu open on a submitted Sales Order, with Contract Term as the first entry above Pick List, Delivery Note and the other standard options](/files/em-setupguide-14-contract-term__create-contract-term-menu.png)

The **Contract Term** entry appears only on a **submitted** order — if you don't see it, submit the order first.

**How you know it worked:** a new Contract Term form opens, already carrying the order — the **Sales Order** link, the **Contract Date** (from the order date), the **Contract Amount** (from the order total), and a row for the order in the **Contract Term Order** table further down.

### 2. Fill in the top block

![Top of a new Contract Term created from Sales Order SAL-ORD-2026-00003: Naming Series CT-, the Sales Order link, Contract Date 12-07-2026, empty Payment Term, Terms Based On set to Letter of Credit, empty Contract Status, To Order checkbox, and Societe Cotonou Trading SARL with its Cotonou address on the right](/files/em-setupguide-14-contract-term__contract-term-top.png)

- **Contract Date** — the date the contract/LC was agreed.
- **Terms Based On** — choose **Letter of Credit** or **CAD**. This is the big switch: pick **Letter of Credit** and the whole **LC Details** section (next step) appears; pick **CAD** and it stays hidden, because a documents-against-payment deal has no LC to describe.
- **Payment Term** — optional link to the agreed credit terms.
- **Contract Status** — your own progress flag for the contract: **Pending**, **Confirm** or **Done**. Set it as the deal moves; nothing is blocked by it.
- **To Order** — tick only if the LC calls for transport documents consigned "to order" (an endorsable bill of lading); leave it unticked otherwise.
- **Customer Name** and **Customer Address** fill in from the order — just confirm they match the buyer named on the LC.

### 3. Copy in the LC details

With **Terms Based On** on **Letter of Credit**, scroll to the **LC Details** section and transcribe the buyer's LC:

![LC Details section filled from a real LC: LC No EBJ-LC-2026-00731, LC Opening Bank Ecobank Benin, LC Bank Address, Documentary Credit Number, Applicant Societe Cotonou Trading SARL, Beneficiary M/s. JUGATMAL CHANDAK, Currency XOF, Contract Amount 8,20,80,000, Date of Issue 12-07-2026, Date of Expiry 12-10-2026, Place of Expiry Cotonou Benin, Drafts At 90 Days, Port of Loading Visakhapatnam, Port of Discharge Cotonou, Latest Date of Shipment 10-09-2026, and the goods description](/files/em-setupguide-14-contract-term__lc-details.png)

Copy each field exactly as the LC states it:

- **LC No**, **LC Opening Bank**, **LC Bank Address** and **Documentary Credit Number** — the LC's identity. The bank comes from the standard Bank list; add it on the spot if it isn't there yet.
- **Applicant** (the buyer, who asked their bank to open the LC) and **Beneficiary** (you, the exporter, who gets paid under it).
- **Currency** and **Contract Amount** — the LC value. **Percentage Credit Amount Tolerance** records the usual "±" allowance on the amount, if the LC grants one.
- **Date of Issue**, **Date of Expiry** and **Place of Expiry** — miss the expiry and the LC is worthless, so get these right.
- **Latest Date of Shipment** — the date by which the goods must be on the water. This is the deadline your shipment work in [Run the Shipment](/setup/12-shipment) has to beat.
- **Drafts At** — when the draft is payable: **Sight** (pay on presentation) or 30/45/60/90/120 days.
- **Port of Loading** and **Port of Discharge** — as named on the LC.
- **Partial Shipment** and **Trans Shipment** — tick only if the LC permits them.
- **Description Of Goods** — the goods text from the LC, word for word. Banks compare documents literally, so your invoice wording must match this.

### 4. Confirm which order the contract covers

Scroll to the **Contract Term Order** table — one row per Sales Order this LC/contract pays for:

![Contract Term Order table with one row linking Sales Order SAL-ORD-2026-00003, its Grand Total and Net Total columns carrying the order's 8,20,80,000 totals, above the Total Grand Amount and Total Net Amount fields still at zero before the first save](/files/em-setupguide-14-contract-term__contract-term-order.png)

The row for your order is already there from step 1. If one LC covers several orders (a common arrangement for repeat buyers), click **Add row** and link the others. **Total Grand Amount** and **Total Net Amount** add the rows up when you save — and the system insists the **Contract Amount** in LC Details is at least the Total Net Amount, so the LC actually covers what you plan to ship.

### 5. List the documents the LC demands

The **Export Documents** table is the paper checklist: which documents you must present to the bank, and how many copies of each.

![Export Documents table listing Commercial Invoice 3 copies, Packing List 3, Bill of Lading 3, Certificate of Origin 1 and Phytosanitary Certificate 1](/files/em-setupguide-14-contract-term__export-documents.png)

1. Click **Add row**.
2. In **Export Document**, pick the document name — the list lives in the **Export Document** master you saw in [Exim Accounts & Masters](/setup/05-exim-setup). Type a new name and choose **Create a new Export Document** to add one on the fly.
3. In **Number**, enter the copy count the LC asks for.
4. Repeat for every document on the LC — commercial invoice, packing list, bill of lading, certificates, whatever your buyer's bank listed.

### 6. Add your verification checkpoints

The **Document Checks** table is the discipline layer — the things someone must positively confirm before the paperwork leaves your office:

![Document Checks table with three checkpoints: LC Terms Verified, Shipment Within Latest Shipment Date, and Documents Submitted To Bank](/files/em-setupguide-14-contract-term__document-checks.png)

Add a row per checkpoint, picking from the **Document Check** master (also seeded in [Exim Accounts & Masters](/setup/05-exim-setup); create new entries inline, same as before). Good checkpoints are the ones that catch expensive mistakes: *LC terms verified*, *shipment within latest shipment date*, *documents submitted to bank*.

The **Amount Allowed To** and **Amount Allowed From** fields below the table appear only for Letter of Credit deals — leave them at zero unless the LC grants an explicit drawing band above or below the contract amount.

These aren't decoration. Every row you add here — and every document row from step 5 — reappears on the export invoice as a checkbox, and the invoice **cannot be submitted** until all of them are ticked.

### 7. Save

Click **Save**.

**How you know it worked:** the form gets a name like **CT-00002** in the title bar, and the **Total Grand Amount** / **Total Net Amount** fields under the order table fill in. If the system objects that "Contract Amount should not be less than Total Net Amount", the LC value you typed in step 3 doesn't cover the orders you linked in step 4 — fix whichever is wrong.

## What this buys you at invoice time

You're done for now — the payoff comes in [Raise the Export Invoice](/setup/15-sales-invoice). There, picking this record in the invoice's **Contract and LC** field pulls both tables in automatically as a live checklist:

![Export Documents block on a submitted export invoice: Contract and LC set to CT-00002, with the Sales Invoice Contract Term Check and Sales Invoice Export Document Item tables pre-filled from the contract and every Checked box ticked](/files/em-setupguide-14-contract-term__invoice-auto-checklist.png)

The invoice offers only contract terms that actually cover its sales orders — so record the Contract Term as soon as the LC arrives, and the right checklist is waiting when billing day comes.