Article 11 - Teletransmitted and Pre-Advised Credits and Amendments

a. An authenticated teletransmission of a credit or amendment will be deemed to be

the operative credit or amendment, and any subsequent mail confirmation shall be
disregarded.
If a teletransmission states "full details to follow" (or words of similar effect), or
states that the mail confirmation is to be the operative credit or amendment, then
the teletransmission will not be deemed to be the operative credit or amendment.
The issuing bank must then issue the operative credit or amendment without delay
in terms not inconsistent with the teletransmission.
b. A preliminary advice of the issuance of a credit or amendment ("pre-advice")
shall only be sent if the issuing bank is prepared to issue the operative credit or
amendment. An issuing bank that sends a pre-advice is irrevocably committed to
issue the operative credit or amendment, without delay, in terms not inconsistent
with the pre-advice.

Let us break the point A into phrases and learn the meaning of each important
phrases.
Authenticated: What is Authenticated? Receiver should be able to verify the
apparent identity of the sender and whether the data received have remained
complete and unaltered;
Teletransmission: Refers to electronic method such as swifts. For LC issuance the
mentioned swifts are used - MT700, MT701, MT707, MT10, MT711, MT720 or
MT799.
Credit: means Letter of credit here. Detailed definition is covered in article 2 which
states ‘any arrangement, however named or described, that is irrevocable and
thereby constitutes a definite undertaking of the issuing bank to honour a
complying presentation’.
Non operative letter of credit: A non-operative LC is one that cannot be used by
the beneficiary in the form in which it is issued. The beneficiary is dependent upon
some further action by the applicant and/or the Issuing bank. So, the opposite is
Operative letter of credit, which means the beneficiary is able to use it as soon as
it is advised to him and present documents under the LC.
"full details to follow" (or words of similar effect): Means the received
information in the teletransmission is incomplete and further instruction will
follow. In such case, the LC will be inoperative until the balance information is
reached. Beneficiary should hold performance under the LC until the complete
information is received. If the beneficiary ships the goods prior to receiving the
complete information, he is under the risk of any discrepancies/non acceptance of
documents by issuing bank.
Teletransmission stating mail confirmation is to be the operative credit or
amendment: Why is a mail confirmation required when authentic tele
transmission is rece ived? Authentic swift itself conveys 1.sender is verified 2.
The received text is complete and unaltered. But why still teletransmission states
about mail confirmation. Even though authenticated messages are sent/received,
the credit itself may not be genuine if the individual(s)/sender has abused the use
of the issuing bank's systems. So Issuer generally says a mail confirmation will
follow.
Without Delay: This term should be understood in their normal meaning of an act
being performed without an undue lapse of time.
{Now read the full first paragraph again and covey the below message}
So the first paragraph says two important messages:
1. The issuing bank must issue the operative credit or amendment.
2. Beneficiary must hold until an operative instrument is received.
Also we covered the scenarios where the received credit will be considered non
operative.
Point B speaks about preliminary advice – in teletransmission format, it is MT705:
Preliminary advice of a documentary credit known as pre-advice are advices
designed to provide early notice to a beneficiary that a documentary credit had
been issued and that full details in letter form were forwarded by air mail or
courier. With the widespread use of swift 700 message, the issuance of
documentary credits in letter form is rapidly declined and remains prevalent only
for local or domestic transactions in which the applicant and beneficiary are
located in the same country.
The SWIFT message type for a pre-advice is the MT705. Even today when a pre-
advice is issued, UCP 600 sub-article 11 (b) commits the issuing bank to issue the
operative credit without delay.
Note that, In cases where pre-advices are issued, the documentary credit should
clearly refer to issuance reference of the pre-advice and its date.
Question:
1. If an issuing bank issues a pre-advice of a credit, can they subsequently advise
that they are cancelling the credit?
No. The rule in sub-article 11 (b) is quite clear - the issuing bank is irrevocably
committed to issue the operative credit. If a bank has any doubt as to whether a
credit will be issued, no pre-advice should be sent.