UCP 600 Revisions Uniform Customs and Practice for Documentary Credits A Seminar on the UCP 600 and

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UCP 600 RevisionsUniform Customs and Practice
for Documentary CreditsA Seminar on the UCP
600 and the revised rules governing Letters of
Credit.Effective 1 June 2007
UCP 600 Revised Rules for Letters of Credit

• John W. Dunlop
• InterNetLC.com, LLC

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UCP 600 Revised Rules for Letters of Credit

• What is the UCP
• UCP is the common reference for the Uniform
  Customs and Practice for Documentary Credits.
• The UCP was first published by the International
  Chamber of Commerce, Paris, France, in 1933 and
  has been revised six times the last time in 1993
  (UCP 500).
• The objective of the UCP was to create a set of
  contractual rules that would establish uniformity
  to conflicting national regulations.
• It is now recognized as standard practice by
  38,000 banks in over 196 countries.

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UCP 600 Revised Rules for Letters of Credit
The Need for revision 70 of documents
presented under Letters of Credit were being
rejected on first presentation.
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UCP 600 Revised Rules for Letters of Credit
What is a Documentary Letter of Credit A
Documentary Letter of Credit is a conditional
payment mechanism (not a guarantee) under which
the issuing bank irrevocably promises to pay the
beneficiary if presented documents comply with
all of the Credits terms and conditions.
Letter of Credit
PackingList
Invoice
BillofLading


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UCP 600 Revised Rules for Letters of Credit
How a Letter of Credit Works
Issuing Bank
Advising / Negotiating Bank
UCP
Seller
Buyer
Letter of Credit
Goods Services
Negotiable Documents
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UCP 600 Revised Rules for Letters of Credit
UCP 600 Structure (39 Articles) Article 1
Application of UCP Article 2 Definitions Article
3 Interpretations Article 4 Credits v.
Contracts Article 5 Documents v. Goods, Services
or Performance. Article 6 Availability, Expiry
Date and Place for Presentation. Article 7
Issuing Bank Undertaking. Article 8 Confirming
Bank Undertaking. Article 9 Advising of Credits
and Amendments. Article 10 Amendments.
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UCP 600 Revised Rules for Letters of Credit
UCP 600 Structure (cont) Article 11
Teletransmitted Pre-Advised Credits/Amends. Arti
cle 12 Nomination. Article 13 Bank-to-Bank
reimbursement Arrangements. Article 14 Standard
for Examination of Documents. Article 15
Complying Presentation. Article 16 Discrepant
Documents, Waiver and Notice. Article 17
Original Documents and Copies. Article 18
Commercial Invoice. Article 19 Transport Doc
Two Different Modes of Transportation. Article
20 Bill of Lading.
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UCP 600 Revised Rules for Letters of Credit
UCP 600 Structure (cont) Article 21
Non-Negotiable Sea Waybill. Article 22 Charter
Party Bill of Lading. Article 23 Air Transport
Document. Article 24 Road, Rail or Inland
Waterway Transport Document. Article 25 Courier
Receipt, Post Receipt or Cert. of
Posting. Article 26 On Deck, Shippers Load
and Count, Said Article 27 Clean Transport
Document. Article 28 Insurance Document and
Coverage. Article 29 Extension of Expiry Date or
Last Day for Presentation. Article 30 Tolerance
in Credit Amount, Quantity and Unit Prices.
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UCP 600 Revised Rules for Letters of Credit
UCP 600 Structure (cont) Article 31 Partial
Drawing or Shipments. Article 32 Installment
Drawings or Shipments. Article 33 Hours of
Presentation. Article 34 Disclaimer on
Effectiveness of Documents. Article 35
Disclaimer on Transmission and Translation. Articl
e 36 Force Majeure. Article 37 Disclaimer for
Acts of an Instructed Party. Article 38
Transferable Credits. Article 39 Assignment of
Proceeds. eUCP Supplement for Electronic
Presentation, Version 1.1
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UCP 600 Revised Rules for Letters of Credit
UCP 500 Articles Removed Article 5
Instructions to Issue/Amend Credits Article 6
Revocable v. Irrevocable Credits Article 8
Revocation of a Credit Article 12 Incomplete or
Unclear Instructions Article 30 freight
Forwarders Transport Documents Article 38 Other
Documents
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UCP 600 Revised Rules for Letters of Credit
UCP 500 Articles Merged Content of Articles 2,
6, 9, 10, 20, 21, 22, 30, 31, 33, 35, 36, 47 and
47 have been merged or addressed within the text
of the UCP 600 revision.
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UCP 600 Revised Rules for Letters of Credit

• New Article 2 Definitions
• Advising Bank
• Applicant
• Banking Day
• Beneficiary
• Complying Presentation
• Confirmation
• Confirming Bank

• Credit
• Honour
• Issuing Bank
• Negotiation
• Nominated Bank
• Presentation
• Presenter

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UCP 600 Revised Rules for Letters of Credit

• New Article 2 Definitions (cont)
• Complying presentation means a presentation
  that is in accordance with the terms and
  conditions of the credit, the applicable
  provisions of these rules and international
  standard banking practice.

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UCP 600 Revised Rules for Letters of Credit

• New Article 2 Definitions (cont)
• 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 or agreeing
  to advance funds to the beneficiary on or before
  the banking day on which reimbursement is due to
  the nominated bank.

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UCP 600 Revised Rules for Letters of Credit

• New Article 2 Definitions (cont)
• Confirmation means a definite undertaking of
  the confirming bank, in addition to that of the
  issuing bank, to honour or negotiate a complying
  presentation.

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UCP 600 Revised Rules for Letters of Credit
Key Change Article 7 Issuing Bank
Undertaking Article 8 Confirming Bank
Undertaking The undertaking of an Issuing or
Confirming Bank includes a deferred payment
undertaking and the responsibility to pay at
maturity.
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents a. must examine a presentation to
determine, on the basis of must examine the
documents alone, whether or not the documents
appear on their face to constitute a complying
presentation.
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) b. ... nominated, confirming
and issuing banks each shall have a maximum of
five banking days to determine if a presentation
is complying (previously seven banking days).
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) d. Data in a document
need not be identical to, but must not conflict
with , data in that document,
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) e. In documents other than
the commercial invoice, the description of the
goods, services or performance, if stated, may be
in general terms not conflicting with their
description in the credit.
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) j. when the addresses of
the beneficiary and the applicant need not be
the same as those stated in the Credit or in any
other stipulated document, but must be within the
same country as the respective addresses
mentioned in the credit.
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) k. The shipper or consignor
of the goods indicated on any document need not
be the beneficiary of the Credit.
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UCP 600 Revised Rules for Letters of Credit
Key Change Article 14 Standard for Examination
of Documents (cont) l. A transport document may
be issued by any party other than a carrier
provided that the transport document meets the
requirements of Articles 19, 20, 21, 22, 23 or 24
of these Articles.
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UCP 600 Revised Rules for Letters of Credit
Critical Article 18 Commercial Invoice a.i.
must appear t have been issued by the
beneficiary a.ii. Must be made out in the name
of the applicant a.iii. must be made out in the
same currency as the Credit a.iv. Need not be
signed.
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UCP 600 Revised Rules for Letters of Credit

• eUCP 600 Version 1.1- Electronic Presentation
• The Supplement to the UCP for Electronic
  Presentation (eUCP) supplements the UCP 600 in
  order to accommodate presentation of electronic
  records alone or in combination with paper
  documents.
• The eUCP shall apply where the Credit indicates
  that it is subject to eUCP.

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UCP 600 Revised Rules for Letters of Credit
eUCP 600 Version 1.1- Electronic Presentation
Highlights

• appears on its face shall apply to examination.
• document shall include an electronic record.
• place for presentation means an electronic
  address.
• sign shall include an electronic signature.
• superimposed, notation or stamped means data
  whose character is apparent in an electronic
  record.

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UCP 600 Revised Rules for Letters of Credit

• eUCP 600 Electronic Presentation Highlights
  (cont)
• sign shall include an electronic signature.
• superimposed, notation or stamped means data
  whose character is apparent in an electronic
  record.
• Presentation of one electronic record
  satisfies requirement for one or more originals
  or copies.

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UCP 600 Revised Rules for Letters of Credit

• Summary The UCP 600 revisions
• Simplifies the overall structure of the UCP
  Articles.
• Will reduce discrepancies for text only related
  inconsistencies.
• Incorporates the eUCP for electronic
  presentation.