What are the key contents of UCP?
Summary of the Key Articles in the ICC UCP 600
- Articles 1 – 5 – General Provisions and Definitions.
- Articles 6 – 13 – Liabilities and Responsibilities.
- Articles 14 – Examination of Documents.
- Article 15 – 17 – Examination of Documents.
- Articles 18 – 28 – Documents.
- Articles 29 – 33 – Miscellaneous Provisions.
How many articles are in the UCP 600?
However, although a voluntary code, the majority of LCs are governed by the UCP 600. They are trans-national in application and comprise of 39 articles setting out detailed requirements which govern the scope of a bank’s obligations and which reflect universal custom and practice.
Can advising bank refuse to advise LC?
According to the letter of credit rules, the advising bank has no payment responsibility against the exporter as long as the advising bank is not a confirming bank. The advising bank advises the letter of credit and any amendment without any undertaking to honour or negotiate.
What action can the respective banks takes in case of the discrepant document?
If discrepant documents are presented, the Issuing Bank responsibility for the documents switches to the Negotiating Bank, and the Issuing Bank will take instructions from the Negotiating Bank about what he should do.
What are UCP rules?
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilized by bankers and commercial parties in more than 175 countries in trade finance.
Is UCP 600 legally binding?
According to Article 1 of UCP 600, the rules are “binding on all parties unless expressly modified or excluded by the credit”. It means that parties to the agreement may not enforced to follow UCP 600 terms and conditions and they are free to choose their own.
What is the latest UCP 600?
UCP 600. The latest (July 2007) revision of UCP is the sixth revision of the rules since they were first promulgated in 1933. It is the outcome of more than three years of work by the ICC’s Commission on Banking Technique and Practice. The UCP remain the most successful set of private rules for trade ever developed.
Can LC be issued after shipment?
Generally advance is granted under this LC only after goods are put in bonded warehouses etc. up to the period of eventual shipment. In such cases warehouse receipts are obtained as security / documentary evidence.
How do you deal with LC discrepancy?
Dealing with Discrepant Documents
LC issuing banks, who receive the documents, should inform the beneficiary banks within five days about the discrepancy of the documents that are being found through SWIFT message. They have this right to quote discrepancy before information to the applicant as well.
Can a letter of credit be Cancelled?
According to the letter of credit rules, a letter of credit should be issued in an irrevocable form, as a result it cannot be cancelled without the written consent of the beneficiary.
Why is UCP 600 important?
As with previous revisions, the general objective of the UCP 600 is to address important and relevant developments in the banking, transport and insurance industries. Additionally, the language and style in UCP 500 were reviewed in order to remove wording that could lead to inconsistent application and interpretation.
Is UCP 600 Irrevocable?
As per Article-3 of UCP 600, a credit is irrevocable even if there is no indication to that effect. Further UCP 600 does not provide for revocable LCs and therefore such credits no longer exist. An Irrevocable Letter of Credit is one which cannot be cancelled or amended without the consent of all parties concerned.
How many days are permitted under UCP 600 to the beneficiary?
UCP 600 sub-article 14 (b) no longer refers to a reasonable time and limits the examination period to a maximum of five banking days following the day of presentation.
Can LC be Cancelled?
In the case of a freely negotiable credit, the bank specifically authorised in the LC as a Transferring Bank, can transfer the LC. A revocable letter of credit is one which can be cancelled or amended by the issuing bank at any time and without prior notice to or consent of the beneficiary.
Can we submit LC after expiry date?
Letter of Credit Expired :
Normally banks should not accept any document that has been presented after the expiry date of the credit. But banks left the ultimate decision to the applicants on this regard and evaluate late presentation after the expiry date as a discrepancy.
Who accept the discrepancies in LC documents?
(6) Buyer may accept the discrepancies and exporter can get the payment. (7) Buyer may negotiate with the exporter and accept the documents for the lower price. In this scenario exporter and exporter’s bank should agree to the same and exporter receives the export payment with a slight lower price.
What are 4 types of letter of credit?
There are four types of Letters of Credit and they are given below.
- A revocable letter of credit.
- An irrevocable letter of credit.
- A standby letter of credit.
- Revolving letter of credit.
What is LC validity period?
LC expiry date means the last date to submit the exported documents with bank for negotiation of documents. Here, the exporter need to submit all required documents with bank after export as per the guidelines mentioned in the letter of credit.
Which type of LC is not available under UCP 600?
Further UCP 600 does not provide for revocable LCs and therefore such credits no longer exist.
What happens if letter of credit expires?
The Letter of Credit shall be deemed invalid after the Letter of Credit Expiry Date, unless the Bank has received the documents specified in the Letter of Credit by the last day of the Letter of Credit.
How is the credit treated under UCP 600?
Can LC be amended after expiry date?
An amendment to an LC signifies any change made to the terms of an LC after it has been authorised. An amendment can be made at anytime after an LC has been authorised and before its expiry date.
CAN expired LC be amended?
An amendment can be made at anytime after an LC has been authorised and before its expiry date.
What happens if LC is expired?