3.1 A letter of credit which is issued by a financial institution which is a member of the Canadian Payments Association, may be accepted by a contracting authority either to provide an incentive for entry into or performance of a contract, or to provide a source of funds to mitigate damages if the successful bidder fails to enter into or perform the contract.
3.2 An irrevocable letter of credit which is issued by a financial institution (the "Issuer") which is not a member of the Canadian Payments Association is acceptable provided it is confirmed by a financial institution (the "Confirmer") that is a member of the Canadian Payments Association and is otherwise in compliance with this policy.
3.3 A revocable letter of credit is one that may be amended or cancelled by the Issuer at any moment and without prior notice to the Crown as beneficiary. The Crown shall only accept letters of credit that clearly specify that they are irrevocable or are deemed to be irrevocable pursuant to article 6 c) of the UCP.
3.4 A letter of credit described in this section may be accepted as an alternative to bid or contract security for all contracts.
3.5 A letter of credit shall:
1. state the face amount which may be drawn against it;
2. state its expiry date;
3. provide for sight payment to the Receiver General for Canada by way of the financial institution's draft against presentation of a written demand for payment signed by the authorized departmental representative identified in the letter of credit by his office;
4. provide that more than one written demand for payment may be presented subject to the sum of those demands not exceeding the face amount of the Letter of Credit;
5. provide that it is subject to the International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No 600.