UCP Art 01

Uniform Customs and Practice for
Documentary Credits 600
What is UCP?
What is UCP?
 UCP is a set of Private Rules formulated by International

Chamber of Commerce (ICC) used in governing
Letter of Credit practice.
Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Implicit Assumption of UCP
BANKERS ARE NEUTRAL AND HONEST

Implicit Assumption of UCP
Cases of non performance and fraud not cover in UCP
When in conflict with local Laws, local laws prevails
Sanctions are automatically applied and will prevail over the rules
Text of the credit will supersede rules

Overview of UCP 600 Articles
39
General Provisions and Definitions 1-5
Liabilities and Responsibilities 6-13
Examination of Documents 14-17
Documents 18-28
Miscellaneous Provisions 29-33
Disclaimers 34-37
Transferable Credit & Assignment 38-39
5
Compliance Route CDCS Exam Preparation Mobile : 01953587666 & 01732646139
Article 01 Application of UCP
The Uniform Customs and Practice for Documentary Credits, 2007

Revision, ICC Publication no. 600 (“UCP”) are rules that apply to any
documentary credit (“credit”) (including, to the extent to which they
may be applicable, any standby letter of credit) when the text of the
credit expressly indicates that it is subject to these rules.
They are binding on all parties thereto unless expressly modified or

excluded by the credit.

The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication
no. 600 (“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which
they may be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is
subject to these rules.
Uniform Customs and Practice for Documentary Credits

International Trade Payment methods
1 Cash in Advance
2 Open Account
3 Documentary Collection
4 Documentary Credit
Md Ashraful Islam, CDCS, CSDG, CAMS 8

Compliance Route
International Trade Payment methods
Risk from the importer’s point of view
Least Risk Most Risk
Open Documentary Letter of Cash In

Account collection Credit Advance
Risk from the Exporter's point of view
Most Risk Least Risk

Compliance Route
Documentary Credit
9. Reimburse
3. Issue LC
8. Forward Document & Claim reimbursement

Issuing Bank Advising Bank/
Nominated Bank
2. Request 10. Make 11. Release 7. Make

for LC Payment Document Payment 4. Advising LC
6. Present
Documents
12. Release goods 5. Shipment goods
Applicant Beneficiary
1. Sign Contract
Fig : Process Flow of Documentary Credit 10

The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600
(“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which they may
be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is subject to
these rules.
 First UCP (UCP82) - 1933

 Revision 01 (UCP 151)- 1951
 Revision 02 (UCP 222)- 1962
 Revision 03 (UCP 290)- 1974
 Revision 04 (UCP 400)- 1983
 Revision 05 (UCP 500)- 1993 1 July, 2007
 Revision 06 (UCP 600)- 2007

ICC Publication
UCP 500 UCP 600

these rules.
The article introduces the term ‘rules’ to refer to the UCP
Previous versions of the article have simply referred to the UCP.
ICC states that “UCP” is ‘rules’ only & not ‘law’.
Nobody is bound or forced to apply “UCP” to administer a

documentary credit transaction.

(“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which
ICC calls a documentary credit just as “Credit”
It applies to ANY “Credit”& covers both
Commercial Documentary Credits

MT 700
Standby Letters of Credit

MT 760

(“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to which
Irrevocable documentary credit
Transferable documentary credit
Back to Back (counter) documentary credit
Clean documentary credit
Advance payment (red clause) documentary credit
Revolving credits & Installment drawings or shipment
Evergreen & Annually renewable documentary credit
Documentary Credits established under aid agreements

these rules.
To the extent to which they may be applicable
য পিরমােণ েযাজ হেত পাের
That is UCP600 rules may not be applicable to

Standby LCs in full extent.

be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is subject
to these rules.
To the extent to which they may be applicable
UCP rules may have limited usage of UCP 600 Rules to SBLC
e.g.,articles18-32 of UCP600 have no practical application to standby
letter of credits

Construction cost of the
bridge $ 4000.00 M
International Invitation for tender
Terms and condition :

1. Bid Bond for 2% of estimated cost
2. If awarded, Bid Bond is replaced by
PG for 10% amount.
3. 10% amount payment in advanced
against APG.
4. Either 10% amount retain or paid
against Retention Guarantee.
Bangladesh Bridge Authority 5. Either 5% amount retain or paid
against Warrantee Guarantee.
***Guarantees must be issued by any

schedule Bank of Bangladesh.

Counter Guarantor Guarantor
Counter Guarantee United Commercial
Bank of China
Bank Limited
 Tender guarantees
 Performance guarantees
 Advance payment guarantees
 Retention money guarantees
 Warranty guarantees
Applicant Beneficiary
China Major Bridge Underlying Tr. Bangladesh Bridge
Engineering Co. Ltd, China. Authority

be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is
Standby Letter of Credit
A standby letter of credit acts as a guarantee if there is a failure to perform a

contractual undertaking, such as the obligation of a buyer to pay or that of a seller to
deliver. It has the same basic form as a commercial documentary credit. However,
the intention is often that a beneficiary, in whose favour a standby letter of credit is
issued, draws only in case of default on the transaction to which the standby letter of
credit relates.

be applicable, any standby letter of credit) when the text of the credit expressly indicates that it is
Types of standby letter of credit Bid-bond, or Tender bond Standby

Advance payment standby
Performance standby
Counter-standby
Financial standby
Insurance standby
Commercial standby
Direct-pay standby


be applicable, any standby letter of credit) when the text of the credit expressly indicates that it
is subject to these rules.
Use of SWIFT:
 40E: Applicable Rules

UCP LATEST VERSION
Use of letter :
 This credit is subject to the Uniform Customs and Practice for

Documentary Credits, 2007 Revision, ICC Publication No. 600.
 This credit is subject to UCP 600

Compliance Route
Use of SWIFT:

UCP LATEST VERSION
Version in effect on the date of issuance

Compliance Route
Sender: SCB, Germany

Receiver: Bank of China, Shanghai, China
F27: Sequence of total: 1/1

F40A: Form of doc credit: Irrevocable
F20: Documentary credit no: 123456
Use of SWIFT: F31C: Date of Issue: 20150101
F40E: Applicable rules: UCP latest version
F31D: Dt& Place of Expiry: 20150630 China
F50: Applicant: Buyer Max Ltd, Germany
F59: Beneficiary: Seller Fine Ltd, China
F32B: Currency code, Amt: USD35,329.25
F41D: Available with, By: Bank of China, By Payment

Use of SWIFT:

UCP LATEST VERSION

EUCP LATEST VERSION

UCP URR LATEST VERSION

EUCP URR LATEST VERSION


F27: Sequence of total: 1/1 May expressly

F40A: Form of doc credit: Irrevocable state elsewhere
F20: Documentary credit no: 123456 in the credit
F40E: Applicable rules: ……………………………..
F47A: Additional conditions: This Credit is subject to UCP600



F40A: Form of doc credit: Irrevocable May expressly
F20: Documentary credit no: 123456 state elsewhere
Use of SWIFT: F31C: Date of Issue: 20150101 in the credit
F40E: Applicable rules: See Field 72
F72A: Sender to Receiver Inf: This Credit is subject to UCP600



F40A: Form of doc credit: Irrevocable
F20: Documentary credit no: 123456
F40E: Applicable rules: Other
F50: Applicant: Buyer Max Ltd, Germany Not Subject
F59: Beneficiary: Seller Fine Ltd, China to UCP
F72A: Additional conditions: This Credit is subject to Local Law

They are binding on all parties thereto unless expressly modified or excluded by the
credit.
Issuing Bank
Beneficiary
Conforming Bank (if any)

They are binding on all parties thereto unless expressly modified or excluded by
the credit.
Examples of modification to the rule

But Invoice does not
require sign as per Art
18
F46A: Documents required: Signed’ Commercial Invoice

Modification
14c
F47A: Additional conditions: Presentation period 10 days

Modification
14b
F47A: Additional conditions: Document Examination time 3 days

the credit.
Examples of exclusion to the rule
F47A: Additional conditions: + LC to revolve each month on cumulative basis
+ Article 32 excluded
F47A: Additional conditions: + Sub-Article 28(c) does not apply

the credit.
Examples of exclusion to the rule
F47A: Additional conditions: + Article 14(b) excluded
the credit needs to further state the maximum number of

days within which document examination must be completed

They are binding on all parties thereto unless expressly modified or excluded by the
credit.
Is any ‘addition’ rather than modification or exclusion is allowed ?
F47A: Additional conditions: +All doc must bear LC no & IRC no.
As per ICC, It should be kept to a minimum


Q. UCPDC stands for
A. Uniform Customs and Practices for Documentary Credit
B. Uniform Customs and Practice for Documentary Credit
C. Uniform Customs and Practice for Documentary Credits
D. Uniform Custom and Practices for Documentary Credits
E. Uniform Custom and Practice for Documentary Credit
Answer C
Q. Which of the following statements is (are) correct?

A. UCP 600 rules are applicable to Standby Credits in full extent.
B. UCP 600 rules have limited usage to Standby Credits.
C. UCP 600 rules are not applicable to Standby Credits.
D. None of the above
Answer B
M A Islam, CDCS, CSDG, CAMS Compliance Route
Q. Which of the following statements regarding UCP is correct?
A. UCP is an international law

B. UCP are governmental rules
C. UCP are private rules of practice
Answer C
Q. Which of the following statements is correct?
A. Credits issued after introduction of UCP600 (1ST July, 2007) are

automatically subject to UCP600.
B. Domestic credits are not covered by UCP.
C. UCP600 articles having the word ‘MUST’ cannot be modified or
excluded.
D. None of the above D
Answer
Q. Which of the following statements regarding UCP600 is (are)
correct?
I. UCP 600 rules are still applicable to a Standby Letter of Credit.
II. Express indication is required in a credit for applicability of UCP 600
rules.
III. UCP 600 is a set of voluntary rules of practice.
IV. Cases of fraud are covered in UCP 600.
A. (I) only
B. Both (I) and (II)
C. (I), (II) and (III)
D. (I), (II), (III) and (IV)
Answer C
A. UCP 600 rules are applicable to Standby Credits in full extent.
B. UCP 600 rules have limited usage to Standby Credits.
C. UCP 600 rules are not applicable to Standby Credits.
Answer B

Q. A Credit was issued by XYZ Bank on July 16, 2007, twenty one days
after introduction of UCP600 rules. The credit neither indicates UCP600
nor any other rules to be applicable to the credit. What is the applicable
rule(s) to the credit?
A. UCP 600.
B. UCP 500.
C. Any of the above.
D. None of the above.
Answer D

Q. UCP can be applied to all of the following transactions EXCEPT
A. Letter of Credit
B. Standbys
C. Guarantees
D. Cash against documents Answer D

A. Modification to an UCP600 rule requires an issuing bank to
specifically state the article number that has been modified.
B. Exclusion of an UCP600 rule requires an issuing bank to specifically
state the article number that has been excluded.
C. Both (A) and (B)
Answer B
Q. Which of the following regarding UCP 600 is (are) correct?
1. UCP 600 rules are still applicable to a Standby Letter of Credit.

2. Express indication is required in a credit for applicability of UCP 600
rules
3. UCP is a set of mandatory rules of practice.
4. Cases of fraud are covered in UCP 600
Which of the above is correct?
A. 1 only.
B. 1 and 2 only.
C. 2 and 4 only.
D. 1, 2 and 3 only
Answer B

Muhammad Ashraful Islam
CDCS CSDG CAMS MBA

UCP Art 01

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UCP Art 01

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Uniform Customs and Practice for

Documentary Credits 600

 UCP is a set of Private Rules formulated by International

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

BANKERS ARE NEUTRAL AND HONEST

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Cases of non performance and fraud not cover in UCP

When in conflict with local Laws, local laws prevails

Text of the credit will supersede rules

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Liabilities and Responsibilities 6-13

Examination of Documents 14-17

Miscellaneous Provisions 29-33

Transferable Credit & Assignment 38-39

The Uniform Customs and Practice for Documentary Credits, 2007

They are binding on all parties thereto unless expressly modified or

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Uniform Customs and Practice for Documentary Credits

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Md Ashraful Islam, CDCS, CSDG, CAMS 8

Risk from the importer’s point of view

Least Risk Most Risk

Open Documentary Letter of Cash In

Risk from the Exporter's point of view

Most Risk Least Risk

Md Ashraful Islam, CDCS, CSDG, CAMS 9

8. Forward Document & Claim reimbursement

2. Request 10. Make 11. Release 7. Make

12. Release goods 5. Shipment goods

Fig : Process Flow of Documentary Credit 10

 First UCP (UCP82) - 1933

 Revision 06 (UCP 600)- 2007

Compliance Route CDCS Exam Preparation Mobile : 01953587666 & 01732646139

UCP 500 UCP 600

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

The article introduces the term ‘rules’ to refer to the UCP

Previous versions of the article have simply referred to the UCP.

ICC states that “UCP” is ‘rules’ only & not ‘law’.

Nobody is bound or forced to apply “UCP” to administer a

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

ICC calls a documentary credit just as “Credit”

It applies to ANY “Credit”& covers both

Commercial Documentary Credits

Standby Letters of Credit

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

Irrevocable documentary credit

Transferable documentary credit

Back to Back (counter) documentary credit

Clean documentary credit

Advance payment (red clause) documentary credit

Revolving credits & Installment drawings or shipment

Evergreen & Annually renewable documentary credit

Documentary Credits established under aid agreements

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

To the extent to which they may be applicable

য পিরমােণ েযাজ হেত পাের

That is UCP600 rules may not be applicable to

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

To the extent to which they may be applicable

Md Ashraful Islam, CDCS, CSDG, CAMS Compliance Route

International Invitation for tender

Terms and condition :

***Guarantees must be issued by any