4.

5 UNIFORM CUSTOMS &

PRACTICE for DOCUMENTARY
CREDITS (UCP 600) & eUCP v.1

1
• UCP is not legally binding unless all parties
under the credit specify that.
• Where the terms of the credit contradict
UCP, the terms of the credit will prevail.
• eUCP allows for electronic presentation or
a combination.
• 1993 version – UCP 500
• 2007 version – UCP 600

2
 A. General Provisions and
Definitions
Article 1
UCP600 will apply to the Credit where it is
stated. This is then binding on all parties of
the Credit.
“This advice is subjected to the UCP 600….”

Note : Both UCP 500 & 600 are acceptable.

3
Article 2 – Definition
• Advising
• Applicant
• Banking Day – a day on which a bank is
regularly open.
• Beneficiary
• Complying Presentation – documents
submitted are in accordance to the
credit
• Confirmation – 2 undertakings
• Confirming Bk

4
Article 2 – Definition
• Credit – deemed irrevocable
• Honour – In summary – documents “accepted”
by NB / IB and payment be made when due.
• IB
• Negotiation – to give value or to purchase
• Nominated Bank
• Presentation – delivery of documents under
the credit to the IB/NB
• Presenter – whoever that is presenting the
documents.

5
Article 3 – Interpretations
• Singular = plural
• Credit is deemed irrevocable even if
there is no indication.

6
Article 3 – Interpretations
• What constitute a signed document ?
– Handwriting
– Facsimile signature
An exact copy of the way that someone signs their name which is put on a
special rubber stamp so that it can be used on a large number of letters,
cheques etc.

– Perforated signature
– Stamp
– Digitised signature
A digitized signature is your handwritten signature reproduced in its identical
form on your computer.

7
Article 3 - Interpretations

• Branches of a bank in different

countries are considered to be
separate banks.

8
Article 3 - Interpretations

Terms such as “first class”, “well

known” etc shall not be used to
describe the issuers of any document.
If such terms are used in a Credit,
banks will accept the document
presented by any issuer except the
exporter to issue the document.

9
Article 3 – Interpretations
• Discourage the use of words such as:
- prompt,
- immediately,
- as soon as possible.

• If words like “about” or similar

expressions, the banks will interpret
them as + 5 days of the specified dates.

10
Brain Teaser
Situation
Shipment date : Around 20/10/20XX

Bank’s position
Will accept shipment dated between :
15/10/20XX to 25/10/20XX (inclusive
of both dates)

11
Article 3 - Interpretations

Describe a period of shipment :

“to”, “until”, “till”, “from” and “between”
 deemed to include the date
mentioned.
“Before”, “after”  exclude the date
mentioned.

12
Article 3 - Interpretations

“first half”  1st – 15th inclusive

“second half”  16th to last day of the
month inclusive.

“beginning” of the month  1st – 10th

inclusive.
“middle”  11th – 20th inclusive.
“end”  21st – last day of the month
inclusive

13
Article 4 – Credits v Contracts
A Credit is separate from the sales
contract.

Article 5 – Doc v Goods/ Services /

Performances
All parties concerned deal with
documents and not with the goods.

14
Article 6 – Availability, Expiry Date &
Place of Presentation

• A Credit must state the bank with which it

is available. (usually the IB/AB/CB)
• A credit available with the NB is also
available with IB.
• State how it is available.
– Sight pymt; deferred pymt;acceptance;
negotiation.

15
Article 6 – Availability, Expiry Date &
Place of Presentation

• Expiry date for presentation must be

indicated.
• The place of the bank which the
credit is available is the place of
presentation. (usually the IB/AB/CB)

16
Article 7 – Liability of IBs
In summary :
In an irrevocable Credit, if the
documents comply with the terms and
conditions of the Credit, the IB must
honour even if the NB does not
negotiate or accept.

17
Article 8 – CB undertaking
• In summary :
In an irrevocable Credit, if the
documents comply with the terms and
conditions of the Credit, the CB must
honour even if another NB does not
negotiate or accept.

18
Article 8 – CB undertaking
• CB must negotiate without
recourse, if the credit is available by
negotiation with the CB (refer to pg
4-10 point 4.3.2 no. 7 and 4.3.3 last
bullet point).

• If the AB not prepared to confirm, it

must inform IB without delay and
may advise.
19
Article 9 – Advising of Credit &
Amendments

• By advising the credit/amendment,

AB indicates that it is satisfied with
the apparent authenticity of the
Credit/ amendment.

20
Article 9 – Advising of Credit &
Amendments

• In cases of more than one AB, all

ABs must be satisfied with the
apparent authenticity before the
Credit/amendment is advised.
• If the bank chooses not the advise
the Credit, it must inform the bank
from which it was received without
delay.
21
Article 9 (cont )
• If the AB cannot establish
authenticity of the credit, without
delay it must inform the bank from
which the instructions appear to have
been received that it has been unable
to establish the authenticity of the
credit.
• if it chooses to advise, it must inform
the beneficiary that it has not been
able to establish the authenticity of
the credit/ amendment.
22
Article 10 – Amendments
• A Credit cannot be amended/ cancelled
without the agreement of the IB, CB (if
any) and the beneficiary.
• An IB is irrevocably bound by an
amendment as of the time it issues the
amendment.
• CB has a choice of whether to confirm
the amendment. If it chooses to advise
and not confirm, then must inform the
IB and beneficiary.

23
Article 10 – (cont)

• The terms and conditions of the

original credit will remain in
forced for the beneficiary until the
beneficiary indicates its
acceptance of the amendment to
the bank that advised the
amendment.

24
Article 10 – (cont)
• The beneficiary should give notification
of the acceptance or rejection.
• If a beneficiary fails to notify but
presents documents which comply
with the terms and conditions of the
amended credit; from that moment, the
amended credit is deemed to have
been accepted by the beneficiary.

25
Article 10 – (cont)

• The bank which advises the

amendment, should inform that bank
that they received the notice from, on
the acceptance or rejection of the
amendment by the beneficiary.
• Partial acceptance of an
amendment is not allowed.

26
Article 11 – Teletransmitted and Pre-
advised credits
Teletransmission will be deemed to the
operative instrument and subsequent
mail confirmation will be disregarded.
“This is an operative instrument and no
mail confirmation will follow.”
This means that the advising bank will
advise based on the teletransmission
message (MT700) sent by the IB.

27
• If the teletransmission states “full details
to follow” or states that the mail
confirmation is to be the operative credit
instrument, then the teletransmission will
NOT be deemed to be the operative
credit instrument.
“This is not an operative instrument and
full details to follow”
Refer to Appendix 1 – item 16.
“With brief advice by teletransmisson”.

28
 Article 11 – Preliminary advice/
Pre-Advice
• If a pre-advice is issued by IB = >
IB must issue the operative LC
without delay.

29
Article 12 Nomination
• If NB = CB, negotiate is without
recourse (refer to pg 4-10 4.3.2
point no. 7 and 4.3.3 last bullet
point).

• Receipt or examination and

forwarding of documents by a NB,
that is not a CB, does not make the
NB liable to honour or negotiate.

30
Article 13
Can ignore.

31
Article 14 – Standard for
Examination of Documents
• NB/CB must examine a
presentation to determine the
documents comply with terms &
conditions of the credit.

32
Article 14 (con’t)
• IB and NB shall each
have a maximum of 5
banking days following
the date of receipt of the
documents to examine
them and determine
whether to take up or
refuse the documents.

33
 Brain Teaser
Situation
The IB received the documents from the S on
1/11/200X (Monday). When is the latest date
the IB must notify acceptance or refusal of
documents?
Bank’s Position
• 1st Banking day starts on 2/11/08
• So IB must reply by 8/11/200X (Monday)

34
Article 14 –(cont)

• A Credit which calls for a transport

document should stipulate a specified
time period after the date of shipment,
during which presentation must be made.

• If not stipulated, banks will not accept

transport documents presented to them later
than 21 days after the date of shipment.

Refer to Appendix 1 – item 13.

35
Article 14 – (cont)
• The Credit should stipulate who should
issue the documents except for
– transport documents,
– insurance documents, and
commercial invoices.
• If the credit does not state, banks will
accept such documents as presented -
provided their data content is consistent
with other stipulated document
presented.

36
 Brain Teaser

Situation
The Credit called for a Veterinary Cert
and did not state who should issue the
document. The exporter issued the
document.
Bank’s Position
• The bank will accept the doc issued by
anyone including the exporter.

37
Article 14 – (cont)
• Documents not stipulated in the
credit will not be examined.

38
 Brain Teaser
Situation
• The Credit requested for invoice, BL and insurance.
The exporter presented all these documents + a
packing list
Bank’s position
• The NB bank will only check all the documents that
are stated in the Credit but not the packing list.
• They can either :
– return them to the exporter OR
– pass them on without responsibility.

39
Article 14 – (cont)

• If a Credit contains conditions

without stating the documents that
needs to comply with the conditions,
then banks will disregard them.

40
 Brain Teaser

Situation
• An LC says “Goods must be made in
Vietnam” but did not specify which document
this condition must appear in.

Bank’s position
• Simply disregard it.

41
Article 14 – (cont)

• Banks will accept a document that is

dated before the issuance of the
Credit but must not be dated later
than its date of presentation.

42
 Brain Teaser
Situation
• The Credit was dated on 13/9/200X and
the latest date of presentation is
1/10/200X. The exporter submitted an
invoice dated on 1/9/200X and an
inspection cert dated 10/10/200X.

Bank’s Position
• Invoice - accepted
• Inspection cert - rejected.

43
Article 14 – (cont)

• When the addresses of the

beneficiary and the applicant
appear in any stipulated documents,
they need not be the same as those
stated in the credit or any other
document, but must be within the
same country as the respective
addresses mentioned in the credit.

44
 Brain Teaser
Situation
• LC shows that the buyer is from Shanghai,
China.
• Invoice shows that the buyer is from
Beijing, China.
• Will the bank accept the invoice?.
Bank’s Position
• Yes.

45
Article 14 – (cont)

• The shipper or consignor (person

who sends out the goods) of the
goods indicated on any document
need not be the beneficiary of the
credit.

46
Article 15
• Not covered.

47
Article 16 – Discrepant Documents ,
Waiver and Notice
• When IB determines that a
presentation does not comply, it may
in its discretion approach the
applicant for a waiver of the
discrepancies. However, this does
not extent the period mentioned in
article 14 (i.e. the 5 banking days).

48
Article 16 – Discrepant Documents ,
Waiver and Notice
• If the IB or NB decides to refuse the
documents, it must give a single
notice to the presenter.

49
Article 16 – Discrepant Documents ,
Waiver and Notice

• In summary :
Such notice must state all
discrepancies and the status of the
documents.
• The notice must be given by
telecommunication no later than the
close of the 5th banking day following
the date of presentation (refer to article
14).

50
Article 16 (Cont)

• Failure to notify, would mean that

the IB/CB shall be precluded from
rejecting the documents ie. the bank
cannot reject the documents.

51
Article 17- Original Documents & Copies

• At least one original of each document stipulated in

the credits must be presented.
• A bank shall treat a document as original if it bears an
apparent original signature, mark, stamp or label of the
issuer of the document
“Marked original”

• If the credit request for multiple copies such as

duplicates or 2 copies or 2 sets => 1 original + the rest
in copies are acceptable unless otherwise stated.

52
Article 18 – Commercial Invoice

• An invoice must :
– be issued by the beneficiary.
– addressed to the applicant.
– be in the same currency as the credit and
– need not be signed.

• Description of the goods in the invoice must

correspond with that on the credit.
(although the Credit would usually have a
less detailed description).
53
Article 19 – 27- Transport
documents

• Refer to the notes in Topic 1 - page

1-7.

54
Article 28 – Insurance document &
Coverage
• Must be issued by insurance
companies or their authorised
agents.
• If more than one original issued, all
originals must be presented.
• Banks will NOT accept an insurance
document which bears a date of
issuance later than the date of
shipment.

55
Article 28 (con’t)
• Unless otherwise stipulated, it must be in
the same currency as the Credit.

• unless otherwise stipulated, minimum

amount of coverage must be 110% of the
CIF/CIP value

• Risks are covered at least between the

place of taking in charge or shipment and
the place of discharge.

56
Article 28 – (cont)
• Where Credit stipulates
“insurance against all risks”,
banks will accept insurance
documents bearing any “all
risks” clause even if it
indicates that certain risks
are excluded.
We know from Topic 1.2.3
that “all risks” does not
cover strikes, riot etc

57
Article 29 – Extension of Expiry Date or
Last Date for Presenation Documents
• If the credit expires / the last day for
presentation of documents falls on a
holiday, then the deadline shall be
extended to the first following day on
which such bank is open.

• Not applicable to the latest date for

shipment. The deadline will be brought
forward to the working day leading to
the latest date of shipment.

58
Article 30 – Tolerance in credit
amount, quantity and unit price

• If words like “about”,

“approximately” etc are used in the
Credit, a difference of + or - 10% is
allowed in the amount of the Credit,
the quantity or the unit price.

59
 Brain Teaser
Situation
• The credit indicated that the unit price is
approximately $10. The exporter’s invoice
indicated that the actual unit price is $9.50
Bank’s position
• The bank will accept the documents as
the tolerance limit for the unit price is
$9 - $11.

60
Article 30 (con’t)
• A tolerance not exceeding + 5% than the
quantity of the goods is allowed, provided
the credit does not state the quantity in
terms of packed units or individual
items and the total amount of the
drawings does not to exceed the
original Credit amount.
• For example Can ship 105% of the
stated quantity BUT only charge 100%
of the LC value.

61
 Brain Teaser
Situation
• The credit was for 100 cans of motor oil.
The exporter’s invoice indicated that the
actual shipment was 98 cans of motor oil.
Bank’s position
• The bank will NOT accept the documents
as no tolerance limit is permitted for
individually packed items.

62
Article 31 – Partial Shipments/
Drawings
Partial drawings and partial shipments
are allowed unless otherwise
stipulated in the Credit.
Article 32 – not covered

63
Article 33 – Disclaimer on Hrs of
Presentation
• A bank has no obligation to accept a
presentation outside of its banking hrs.
• Bank counter closes at 4.30pm.
Beneficiary submitted at 5pm.
• Should the Bank accept?
NO. If it does, it will treat the documents as
being submitted the next day.

64
Article 34 - Disclaimer
• Banks assume no liability or
responsibility for the accuracy or
genuineness of the documents.

Article 35 – Disclaimer
• Banks assume no liability or
responsibility for the consequences
arising out of delay or loss in transit
of documents and for errors in
translation.

65
Article 36 – Force Majeure
• Banks assume no liability or
responsibility for consequences
arising out of the interruption of their
business by Acts of God, riots, wars
or any other causes beyond their
control.

66
Article 37 – Disclaimer
A bank utilising the services of another
bank for the purpose of giving effect
to the instructions of the applicant
does so for the account and at the
risk of the applicant.

67
Article 37 - Disclaimer
• Banks assume no liability or
responsibility should the instructions
they transmit out to another bank
not be carried out.

 If a credit states that charges are for

the account of the beneficiary and
charges cannot be collected, then the
IB remains liable for payment of
charges.
68
Article 38 – Transferable Credit
Refer to pages 4 – 14 to 4 – 16. (e-
learning)

69
 Article e1 – Scope

• Allows for electronic presentation /

or combination.

• Will indicate that it is subject to

eUCP.

70
 Article e2 – Relationship of the
eUCP to the UCP
• A Credit subject to eUCP is also
subject to UCP.

• In an eUCP credit, Beneficiary can

choose to present
– Electronic records and / or
– Paper documents.
71
 Article e3 - Definitions

• “appears on the face” = examination

of the data content
• “document” = electronic record
• “place of presentation” = an electronic
address
• “sign” = include an electronic
signature
72
 Article e4 - Format

• Format must be specified, if not

then any format will be accepted by
the bank.

73
 Article e5 - Presentation
• Must state a place of presentation
of electronic records.
• Separate presentation of electronic
records are allowed.
• Beneficiary needs to provide notice
when the presentation is complete.

74
 Article e5
• If the Bank’s system fails to
receive transmitted record on the
due date

=> then the due date would be

extended to the first following
banking day that the Bank receives
the record.

75
 Brain teaser
Situation
15/1/200X (Monday) - Documents sent but bank’s
system fails to receive them.
16/1/200X (Tuesday) - Documents were successfully
received on.
When is the new presentation date?

Comments
16/1/200X (Tuesday) - New presentation date of
documents

76
 Artice e5

• Electronic record that cannot be

authenticated = not presented.

77
 Article e6 - Examination

• If the Banks are unable to access the

hyperlink to examine the documents
= discrepancy.
• In summary :
Banks need to examine electronic
records in the hyperlink.

78
 Article e7 – Notice of refusal

• The time period of examination of

document starts on the banking day
following the banking day when
notice of completeness is given.

79
 Brain teaser
Situation
15/1/200X (Monday) – Notice of completeness
given by Beneficiary.
When is the start date for the Bank to examine
the documents?

Comments
Bank is given 5 banking days to examine the
documents starting from 16/1/200X
(Tuesday).

80
Article e8 – Originals & Copies

• When the Credit calls for numerous

copies of an electronic record
=>presentation of 1 electronic record
will suffice.
Presumption of originality if one
electronic record is presented.

81
 Article e9 – Date of Issuance

• Unless an electronic record contains

a specific date of issuance, the date
of which it appears to have been sent
by the issuer is deemed to be the
date of issuance.

82
 Article e10 - Transport

• If transport document does not

indicate the date of shipment,
then date of issuance of electronic
record = date of shipment.

83
 Article e11 – Corruption of an
Electronic record after
presentation
• If the bank requests for re-
presentation of documents, the time
of examination is suspended and
resumes upon re-presentation.
• Re-presentation must be done
within 30 days.

84
 Brain teaser

• Feb 1 - exporter presented all the

documents.
• Feb 2 - bank informed exporter to re-
present the invoice – the exporter has
30 days to do so.

85
Article e12 – Additional disclaimer

• Banks assume no liability for

– identify of the sender
– source of the information.

86
 Mental Break
• You are participating in a race. You
overtake the 2nd place person. What
position are you in?
• You are in a race & you overtake the last
person. You are in what position?
• Mary’s father has 5 daughters. 1. Nana 2.
Nene 3.Nini 4. Nono

87
Discrepancies

88
Remedies
for Discrepancies

1. Return the documents to the

beneficiary for correction and
resubmission within the period of
validity.
2.Return the documents to the beneficiary
for direct action by him.

89
 Remedies
for Discrepancies

3.Request by teletransmission to the IB

for authorisation to proceed with
settlement against the discrepant
documents.

4. NB to send the docs to the IB for

acceptance.

90
 Remedies
for Discrepancies

4. Exporter presents docs to NB and

request them to pay, accept or
negotiate under reserve (i.e. if the IB
refuses to accept the documents, the
NB retains the right to recourse to
the exporter and requests for
reimbursement).

91
 Recap of last lecture lecture
Questions
An LC says “Doc must be presented
for negotiation immediately after
shipment.”
• How should the bank treat the word
“immediately”?
• Article 3
• Simply disregard it

92
 Questions

An LC says “Shipment to be made

between 1/12/200X and 31/12/200X”.
• What are the earliest and latest shipment
dates?
• Article 3
• 1/12/200X and 31/12/200X respectively.

93
 Questions

If AB is unable to authenticate the

credit, the bank should ______
• Article 9
• Inform the IB asap.
• May give a preliminary notice to
exporter which may be subjected to
changes
94
 Questions

• If AB confirms the original credit, can

it select not to confirm the
amendments?
• Article 10
• Yes - inform the IB & seller that their
confirmation is only for the original
amount.

95
 Questions

• When is an LC effectively amended?

(Article 10)
• When the seller accepts the
amendment by giving notification.
• If he fails to do so but presents
documents which comply with the
amended credit => deemed to have
accepted.

96
 Questions

• If the credit reads “this is an

operative instrument and no mail
confirmation will follow, the bank will
act on the teletransmission. T/F ?
• (Article 11)
• True- advise based on the SWIFT
message

97
 Questions
• If the credit reads “ this is not an
operative instrument and full details
to follow” the bank will act on the
teletransmission. T/F ?
• (Article 11)
• False - bank will not act on the
SWIFT message and wait for a
letter LC from the IB.
98
 Questions

• Bank received a set of commercial

invoices and it was not signed. Should
the bank reject the documents?
• Article 3 & 18
• Check the LC – does it specify
whether the invoice must be manually
signed? If it does not, then the bank
can accept the invoices.

99
 Questions

• The Issuing Bank decides to reject the

documents received from the exporter
through the NB Bank. Outline the actions
the IB should take.
• Article 16
• Notify NB that they are rejecting the
documents within 5 banking days.
• State all discrepancies.
• Inform on status of the documents.

100
 Questions

• What happens if the Issuing Bank

fails to notify within 5 banking days?
• Article 16
• The IB cannot reject the
documents and must effect
payment to the NB/ exporter.

101
 Questions

• The credit states that the price was

of each unit was “circa $100.00”.
• Article 30
• +/- 10% tolerance limit allowed.
• Invoice price can vary from $90-
$100.

102
 Questions

• The credit states that the price was of

each unit was “$100.00”. Can the +/-
tolerance limit of 5% be used?

• Article 30
• It depends. Are the goods in packed
units or individual items? If they are,
then the 5% tolerance limit cannot be
used.

103