Uniform Customs and Practice (Ucp)

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UNIFORM CUSTOMS AND

PRACTICE (UCP) - 600

Navjit Singh Saini



What is UCP 600 ??

• UCP 600 are the latest revision of the UniformCustoms and Practice that govern the operationof letters of credit.

• UCP 600 comes into effect on 01 July 2007 .



UCP HELPS ??????

• The 39 articles of UCP 600 are a comprehensiveand practical working aid to bankers, lawyers,importers, and exporters, transport executives,educators, and everyone involved in letter ofcredit transactions worldwide.



OBJECTIVE

• Objective was to create a set of contractual rulesthat would establish uniformity in that practice,so that practitioners would not have to cope witha plethora of often conflicting nationalregulations.



UCP 500 vs. UCP 600

• The UCP 600 which contains 39 Articles,compared to its predecessor UCP 500 which

contained 49 Articles

• There were issues relating to the term“negotiation”, what constituted an “original

document” in the context of sub-article 20(b)and questions concerning ports of delivery anddischarge, imprecise interpretative phrases like“without delay” and “on its face”



UCP 600 - Article 1 (Application ofUCP) • The Uniform Customs and Practice for

Documentary Credits, 2007 Revision, ICCPublication no. 600 ("UCP") are rules that applyto any documentary credit ("credit") when thetext of the credit expressly indicates that it is

subject to these rules. They are binding on allparties thereto unless expressly modified orexcluded by the credit.



UCP 600 - Article 2 (Definitions) • Negotiation means the purchase by the

nominated bank of drafts (drawn on a bank

other than the• nominated bank) and/or documents under a

complying presentation, by advancing oragreeing to advance

• funds to the beneficiary on or before the bankingday on which reimbursement is due to thenominated

• bank.



UCP 600 - Article 3 (Interpretations)

• A credit is irrevocable even if there is noindication to that effect.

• The words "to", "until", "till", "from" and"between" when used to determine a period ofshipment include the date or dates mentioned,

and the words "before" and "after" exclude thedate mentioned.



UCP 600 - Article 4 (Credits v.Contracts) • The substance of this judicial pronouncement is

that the letter of credit should be treated ascompletely independent of the underlyingcontract of sale.



UCP 600 - Article 9 (Advising ofCredits and Amendments) • A credit and any amendment may be advised to

a beneficiary through an advising bank. Anadvising bank that is not a confirming bankadvises the credit and any amendment withoutany undertaking to honour or

• negotiate.



UCP 600 - Article 14 (Standard forExamination of Documents) • A nominated bank acting on its nomination, a

confirming bank, if any, and the issuing bankmust examine a presentation to determine, onthe basis of the documents alone, whether or notthe documents appear on their face to constitute

a complying presentation.



UCP 600 - Article 17 (OriginalDocuments and Copies) • At least one original of each document stipulated

in the credit must be presented.

• A bank will also accept a document as original ifit:

• i. appears to be written, typed, perforated orstamped by the document issuer's hand; or

• ii. appears to be on the document issuer'soriginal stationery; or

• iii. states that it is original, unless the statementappears not to apply to the document presented.



UCP 600 - Article 18 (CommercialInvoice) • A commercial invoice:

• i. must appear to have been issued by the

beneficiary• ii. must be made out in the name of the applicant;

• iii. must be made out in the same currency as thecredit; and

• iv. need not be signed.

• The description of the goods, services orperformance in a commercial invoice mustcorrespond with that appearing in the credit.



UCP 600 - Article 20 (Bill of Lading)

• A bill of lading, however named, must appear to:• indicate the name of the carrier and be signed

by:• the carrier or a named agent for or on behalf of

the carrier, or• the master or a named agent for or on behalf of

the master.• Any signature by the carrier, master or agent

must be identified as that of the carrier, masteror agent.



UCP 600 - Article 24 (Road, Rail orInland Waterway Transport Documents) • A road, rail or inland waterway transport

document, however named, must appear to:

• indicate the name of the carrier and:

• - be signed by the carrier or a named agent for oron behalf of the carrier, or

• - indicate receipt of the goods by signature,stamp or notation by the carrier or a namedagent for or on

• behalf of the carrier.



UCP 600 - Article 28 (InsuranceDocument and Coverage) • An insurance document, such as an insurance

policy, an insurance certificate or a declaration

under an open cover, must appear to be issued andsigned by an insurance company, an underwriter ortheir agents or their proxies.

• Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on

behalf ofthe insurance company or underwriter.• When the insurance document indicates that it has

been issued in more than one original, all originalsmust be presented.



UCP 600 - Article 38 (TransferableCredits) • A bank is under no obligation to transfer a credit

except to the extent and in the manner expressly

consented to by that bank.For the purpose of this article:

• Transferable credit means a credit thatspecifically states it is "transferable". A

transferable credit may be made available in whole or in part to another beneficiary ("second beneficiary") at the request of the beneficiary("first beneficiary").



UCP 600 - Article 39 (Assignment ofProceeds) • The fact that a credit is not stated to be

transferable shall not affect the right of the

beneficiary to assign any proceeds to which itmay be or may become entitled under the credit,in accordance with the provisions of applicable

law. This article relates only to the assignment ofproceeds and not to the assignment of the rightto perform under the credit .

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