eUCP V1.1 Supplement to UCP 600

eUCP - Article e1
Scope of the eUCP

a. The Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation ("eUCP") supplements the Uniform Customs and Practice for Documentary Credits (2007 Revision ICC Publication No. 600,) ("UCP") in order to accommodate presentation of electronic records alone or in combination with paper documents.

b. The eUCP shall apply as a supplement to the UCP where the credit indicates that it is subject to eUCP.

c. This version is Version 1.1. A credit must indicate the applicable version of the eUCP. If it does not do so, it is subject to the version in effect on the date the credit is issued or, if made subject to eUCP by an amendment accepted by the beneficiary, on the date of that amendment.


eUCP - Article e2
Relationship of the eUCP to the UCP

a. A credit subject to the eUCP ("eUCP credit") is also subject to the UCP without express incorporation of the UCP.

b. Where the eUCP applies, its provisions shall prevail to the extent that they would produce a result different from the application of the UCP.

c. If an eUCP credit allows the beneficiary to choose between presentation of paper documents or electronic records and it chooses to present only paper documents, the UCP alone shall apply to that presentation. If only paper documents are permitted under an eUCP credit, the UCP alone shall apply.


eUCP - Article e3
Definitions

a. Where the following terms are used in the UCP, for the purposes of applying the UCP to an electronic record presented under an eUCP credit, the term:

i. appear on their face and the like shall apply to examination of the data content of an electronic record.

ii. document shall include an electronic record.

iii. place for presentation of electronic records means an electronic address.

iv. sign and the like shall include an electronic signature.

v. superimposed, notation or stamped means data content whose supplementary character is apparent in an electronic record.

b. The following terms used in the eUCP shall have the following meanings:

i. electronic record means

- data created, generated, sent, communicated, received or stored by electronic means

- that is capable of being authenticated as to the apparent identity of a sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered, and

- is capable of being examined for compliance with the terms and conditions of the eUCP credit.

ii. electronic signature means a data process attached to or logically associated with an electronic record and executed or adopted by a person in order to identify that person and to indicate that person's authentication of the electronic record.

iii. format means the data organization in which the electronic record is expressed or to which it refers.

iv. paper document means a document in a traditional paper form.

v. received means the time when an electronic record enters the information system of the applicable recipient in a form capable of being accepted by that system. Any acknowledgement of receipt does not imply acceptance or refusal of the electronic record under an eUCP credit.


eUCP - Article e4
Format

An eUCP credit must specify the formats in which electronic records are to be presented. If the format of the electronic record is not so specified, it may be presented in any format


eUCP - Article e5
Presentation

a. An eUCP credit allowing presentation of:

i. electronic records must state a place for presentation of the electronic records.

ii. Both electronic records and paper documents must also state a place for presentation of the paper documents.

b. Electronic records may be presented separately and need not be presented at the same time.

c. If an eUCP credit allows for presentation of one or more electronic records, the beneficiary is responsible for providing a notice to the bank to which presentation is made signifying when the presentation is complete. The notice of completeness may be given as an electronic record or paper document and must identify the eUCP credit to which it relates. Presentation is deemed not to have been made if the beneficiary's notice is not received.

d.

i. Each presentation of an electronic record and the presentation of paper documents under an eUCP credit must identify the eUCP credit under which it is presented.

ii. A presentation not so identified may be treated as not received.

e. If the bank to which presentation is to be made is open but its system is unable to receive a transmitted electronic record on the stipulated expiry date and/or the last day of the period of time after the date of shipment for presentation, as the case may be, the bank will be deemed to be closed and the date for presentation and/or the expiry date shall be extended to the first following banking day on which such bank is able to receive an electronic record. If the only electronic record remaining to be presented is the notice of completeness, it may be given by telecommunications or by paper document and will be deemed timely, provided that it is sent before the bank is able to receive an electronic record.

f. An electronic record that cannot be authenticated is deemed not to have been presented.


eUCP - Article e6
Examination

a. If an electronic record contains a hyperlink to an external system or a presentation indicates that the electronic record may be examined by reference to an external system, the electronic record at the hyperlink or the referenced system shall be deemed to be the electronic record to be examined. The failure of the indicated system to provide access to the required electronic record at the time of examination shall constitute a discrepancy.

b. The forwarding of electronic records by a nominated bank pursuant to its nomination signifies that it has satisfied itself as to the apparent authenticity of the electronic records.

c. The inability of the issuing bank, or confirming bank, if any, to examine an electronic record in a format required by the eUCP credit or, if no format is required, to examine it in the format presented is not a basis for refusal.


eUCP - Article e7
Notice of Refusal

a.

i. The time period for the examination of documents commences on the banking day following the banking day on which the beneficiary's notice of completeness is received.

ii. If the time for presentation of documents or the notice of completeness is extended, the time for the examination of documents commences on the first following banking day on which such bank is able to receive the notice of completeness.

b. If an issuing bank, the confirming bank, if any, or a nominated bank acting on its nomination, provides a notice of refusal of a presentation which includes electronic records and does not receive instructions from the party to which notice of refusal is given within 30 calendar days from the date the notice of refusal is given for the disposition of the electronic records, the bank shall return any paper documents not previously returned to the presenter but may dispose of the electronic records in any manner deemed appropriate without any responsibility.


eUCP - Article e9
Date of Issuance

Unless an electronic record contains a specific date of issuance, the date on which it appears to have been sent by the issuer is deemed to be the date of issuance. The date of receipt will be deemed to be the date it was sent if no other date is apparent.

eUCP - Article e8
Originals and Copies

Any requirement of the UCP or an eUCP credit for presentation of one or more originals or copies of an electronic record is satisfied by the presentation of one electronic record


eUCP - Article e10
Transport

If an electronic record evidencing transport does not indicate a date of shipment or dispatch, the date of issuance of the electronic record will be deemed to be the date of shipment or dispatch. However, if the electronic record bears a notation that evidences the date of shipment or dispatch, the date of the notation will be deemed to be the date of shipment or dispatch. A notation showing additional data content need not be separately signed or otherwise authenticated.


eUCP - Article e11
Corruption of an Electronic Record After Presentation

a. If an electronic record that has been received by the issuing bank, confirming bank, or another nominated bank appears to have been corrupted, the bank may inform the presenter and may request that the electronic record be re-presented.

b. If the bank requests that an electronic record be re-presented:

i. the time for examination is suspended and resumes when the presenter re-presents the electronic record; and

ii. if the nominated bank is not the confirming bank, it must provide the issuing bank and any confirming bank with notice of the request for re-presentation and inform it of the suspension; but

iii. if the same electronic record is not re-presented within thirty (30) calendar days, the bank may treat the electronic record as not presented, and

iv. any deadlines are not extended.


eUCP - Article e12
Additional Disclaimer of Liability for Presentation of Electronic Records under eUCP

By satisfying itself as to the apparent authenticity of an electronic record, banks assume no liability for the identity of the sender, source of the information or its complete and unaltered character other than that which is apparent in the electronic record received by the use of a commercially acceptable data process for the receipt, authentication and identification of electronic records.

Documentary Collections

A Documentary Collection would normally comprise a set of commercial documents relating to the goods being exported, which are sent to the Importer's bank along with a Collection Schedule and usually a Bill of Exchange. A set of documents containing a Bill of Lading would normally allow the holder to take possession of the goods. A Collection takes one of the following forms:

Documents Against Payment: the Collection documents are presented to the Importer and released in exchange for immediate payment (payment 'at sight').

Documents Against Acceptance: this applies with a Tenor Bill of Exchange and describes the situation where the Collection documents are released after the Importer has 'accepted' them. Acceptance is signified by the Importer's signature on the Bill of Exchange or other payment authority enclosed in the Collection. Payment will be made at a fixed or determinable future date

Features & Benefits

Easy to use, simpler than a Letter of Credit
Cheaper than alternative secure trading instruments
Increased certainty of payment when collection is 'at sight'
Improves cashflow control for the Exporter
Option to use 'term' collection payment improves cashflow for the Importer (through potential to negotiate an extended credit period).

Key Stages Documentary Collection Process

1. Importer and Exporter negotiate the sale and discuss the contract
2. Exporter sends goods to Importer
3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
7. Money sent to Remitting bank if 'at sight', notice of acceptance sent if 'term'
8. Remitting Bank sends money to Exporter or holds acceptance Bill for presentation at maturity

Key Stage 1. Importer and Exporter negotiate the sale and discuss the contract

The more information that is determined at this stage, the less likelihood there is of problems occurring and the more efficient the trading process will be.

Discussions should aim to ensure that the contract includes all the details of the transaction. These would typically cover the following, though they will vary according to specific countries, goods etc.

Financial Considerations
Individual Importer credit limits, with 'in house' and credit insurer if applicable. (Use of credit insurance should never be revealed to the Importer) - consideration for Exporter
Payment terms, ie. upon receipt of shipping documents by the Importer's Bank or have credit terms been agreed
Currency of contract/payment
Exchange control regulations
The need for any import licenses
Banking details - Importers details to be provided to Exporter.
Legal Considerations

Terms and conditions of sale/purchase
Agency or distribution arrangements
Retention of title. If the Importer refuses or is unable to pay, does the Exporter still have access and control over the goods - consideration for Exporter
'Protest' re. unaccepted/unpaid bills of exchange - consideration for Exporter
Usefulness of appointing a 'Case of need' - consideration for Exporter
Consignment stock - restrictions on repatriating unused stock - consideration for Exporter
Product liability insurance
Counterfeit supplies - consideration for Importer.
Supply Considerations

Delivery periods on goods
Delays with particular goods
Preference for non-standard quantity packing
Special requirements such as pre-shipment fumigation
Pre-shipment inspection/price comparison requirements.
Shipping Considerations

Methods of transport available; direct or indirect
Frequency of departures
Approximate costs of alternative methods/routes
Type of packing
Correct Incoterm according to contract/transport mode
Optimum delivery points, i.e. transported from where to where
Required documentation, provided by Exporter to Importer
Insurance of goods
Delays for consular work or inspection formalities.

Key Stage 2. Exporter sends goods to Importer
Shipment of the goods takes place via the agreed method, under the terms of the contract.

Key Stage 3. Exporter sends Collection Schedule and Documents to their bank, the Remitting Bank
The Exporter then provides documents to their bank, the Remitting Bank, and asks them to undertake the documentary collection.

Key Stage 4. Collection Schedule and Documents sent from Remitting Bank to the Importers Bank, the Presenting/Collecting Bank
The Remitting Bank is the Exporter's bank, the Presenting Bank is the Importer's Bank.

The Presenting/Collecting Bank is any bank other than the Remitting Bank involved in processing the collection.

Choice of 2 delivery channels
There are two alternative delivery channels: paper-based; e-banking.

Paper-based Exporter completes a paper Collection schedule, encloses the relevant documentation and forwards it to the Exporter's bank for checking and onward remittance to the Importer's bank (the 'Presenting/Collecting Bank').
E-banking Exporter prepares an electronic Collection schedule using an electronic delivery channel and then posts the documents direct to the Importers' bank.
The cost of the collections service will be determined by the choice of delivery channel, with electronically originated applications being the lowest cost option.

Method of Sending
For the two channels of delivery described above, the documents can be sent to the Importer's bank by either of the two methods below. The Exporter decides what method is used. This is indicated on the schedule form:
1. Mail - the standard choice unless otherwise indicated.
2. Courier - useful when documents need to be presented quickly.

Key Stage 5. Documents are presented to Importer by Presenting/Collecting Bank for payment if a 'Sight Bill' or acceptance if a 'Term Bill'
The Presenting/Collecting Bank contacts the Importer to provide details of the schedule and documents sent to them from the Remitting Bank. The documents are held by the Presenting/Collecting Bank and will not be released until the terms given by the Exporter have been met.

It is important to note that the Presenting/Collecting Bank is acting as agent for the Exporter. This contractual agency agreement overrides any relationship the Presenting Bank might have with the Importer. The Presenting Bank must only act in accordance with the instructions contained in the schedule

Key Stage 6. Importer pays Bill if 'at sight', or accepts the Bill if 'term'
Settlement can be by immediate payment if the Bill is 'at sight', or acceptance if the Bill is 'term' ie. where a credit period is given. With term bills, the Importer accepts the Bill of Exchange and in so doing, undertakes to make payment on an agreed future date. It is important to note that payment is not guaranteed by the Importer's bank (Presenting Bank) even when the Importer has accepted a bill. At maturity, the Presenting Bank will contact the Importer and present the accepted bill for payment.

Key Stage 7. Proceeds sent to Remitting Bank if 'at sight', notice of acceptance sent if 'term'
When payment has been received by the Presenting Bank through either 'sight' or 'acceptance', they pay the Remitting Bank by mail or SWIFT (Society for Worldwide Interbank Financial Telecommunications).

Key Stage 8. Remitting Bank sends proceeds to Exporter or holds accepted Bill for presentation at maturity
Payment is made to the Exporter either at sight, or on maturity of a term bill; both less charges due.
If payment is refused
Although there is a contractual arrangement between Importer and Exporter, the Importer cannot be forced to pay by a bank under the Documentary Collection.
If payment is refused when the documents are to be released on payment (ie. at sight)
If the Importer refuses payment, the Presenting/Collecting Bank advises the Remitting Bank and therefore the Exporter, and asks for their further instructions. The Presenting/Collecting Bank to the order of the Remitting Bank holds documents.

The Presenting/Collecting Bank may arrange 'Protest' (or other Legal process) of the Bill of Exchange if the Exporter stipulated this on the schedule.

If acceptance is refused when the documents are to be released on acceptance
If the Importer refuses acceptance, see above.

If accepted and not paid on the due date
The Bill of Exchange may have been accepted, but then payment is refused on the due date. However the documents will have been released to the Importer upon acceptance. The Presenting/Collecting Bank will then advise the Remitting Bank and ask for further instructions.

Avalisation
In order to avoid the above, the Exporter may wish to consider asking that documents be released against the Importer's acceptance of the Bill of Exchange and a guarantee of payment from the Presenting/Collecting Bank. This is called Avalisation.

We recommend that if payment is refused, the two parties try to resolve the matter between them, whether the concerns are contractual or relating to the goods themselves.

We would strongly recommend that anyone who is dealing with documentary collections refers to the Uniform Rules for Collections (URC).

Documentary Letters of Credit

A Documentary Letter of Credit (LC) is a written undertaking given by a bank on behalf of an Importer to pay the Exporter a given sum of money within a specified time, providing that the Exporter presents documents which comply with
the terms laid down in the Letter of Credit.

Letters of Credit can be for any amount, in any freely traded currency, and, subject to the presentation of compliant documents, may be payable:
at sight, which means as soon as a compliant set of documents are presented to the paying bank; or, after a specified term, e.g. at 30, 60, 90 or 180 days of sight or Bill of Lading date.

If the documents are not presented exactly as specified in the Letter of Credit, payment will not be made unless the Importer gives their authority to waive or amend the specified condition.

A fundamental principle of Letters of Credit is that banks deal with documents and not with the goods to which the documents refer.

For example, if the Importer is not happy with the quality of the goods but the documents comply with the terms and conditions of the Letter of Credit, the Importer's bank is obliged to pay the Exporter.

Parties involved in a Letter of Credit transaction

In the process of a Letter of Credit transaction, there are essentially four parties involved. These parties can be referred to by a number of terms, outlined below.

Buyer meaning Importer, Applicant, Accountee or Accreditor.
In this guide we use the term Importer.

Seller meaning Exporter or Beneficiary; here we use the term Exporter.

The Issuing or Opening Bank (Importers Bank)

The Advising/Confirming Bank - usually a bank in the Exporters country which may or may not be the Exporters Bank.

Types of Letter of Credit

Revocable
This is an LC that can be cancelled or amended by the applicant or the Opening Bank without prior notice to the Exporter.

Irrevocable
With an irrevocable Letter of Credit the Issuing Bank gives its irrevocable undertaking to pay if all the terms of the LC are met. The Issuing Bank can only amend or cancel its undertaking if all parties to the LC consent to the change.

NB: Although there are two types of Letter of Credit: revocable and irrevocable, LCs dealt with by ‘Bank’ are irrevocable. Under UCP 500 (Uniform Customs and Practice for Documentary Credits), if a LC is not stated to be revocable or irrevocable, it will be considered to be irrevocable.

Confirmed
A Confirmed LC is one to which a second bank, usually in the Exporter's country and at the Exporter's request, adds its own commitment (confirmation) that payment will be made. Confirmation is generally used when there is perceived to be some risk that the bank issuing the Letter of Credit may not be able to fulfil its obligation to pay. This could be due to bank failure or instability in the country of the Issuing Bank.

Unconfirmed
If the LC is unconfirmed, the Advising Bank merely informs the Exporter of the terms and conditions of the LC without adding its own undertaking to pay or accept under the terms of the LC.

Transferable
A Transferable Letter of Credit is one that can be transferred from the first Beneficiary to one or more additional Beneficiaries by the Transferring Bank.

It is normally used in situations where a supplier sells through an intermediary or 'middleman' to the ultimate Importer and is in a strong enough bargaining position to insist upon payment by Letter of Credit. By using a Transferable Letter of Credit, the intermediary is able to provide payment by LC to their supplier without the need for their own credit line with the transferring bank. An LC is only transferable if it is expressly stated to be so by the Issuing Bank.

Others
There are other less commonly used variations of Letter of Credit, for example Back-to-Back, Red Clause and Revolving.
‘Bank’ can advise you of the type of Letter of Credit best suited to meet your needs. More detailed information on other types of LC.

Special Types of letters of Credit

Transferable
Transferable Letters of Credit are used when the Exporter is acting as an intermediary between the Importer and Exporter in a commercial transaction. In this instance, all of the rights and obligations of the LC are transferred from the intermediary to the ultimate supplier. The intermediary has no liability.

The terms of the transferred LC must be the same as the original except for the amount, unit price, expiry date, latest presentation date and period of shipment. All of these may be reduced, or brought forward.

The identities of the Importer and the ultimate supplier may need to be withheld from each other. Careful drafting of the original and transferred Letter of Credit is needed to ensure this occurs. (NB: ‘Bank’ assumes no liability or responsibility for any disclosure).

Back-to-Back
In this instance, two LCs are established completely independently of each other. The Importer establishes theirs in the Exporter's favour. The Exporter can then arrange a second LC in favour of the ultimate supplier of the goods or the supplier of raw materials.

This type of LC should only become necessary where the underlying contracts are on terms which do not match or where a Transferable LC is unable to maintain secrecy on a particular aspect of the transaction.

Due to the greater risk involved with this type of LC, they are rarely issued.

Revolving
If an Exporter makes regular shipments to a particular Importer under a long term supply contract, it may be beneficial for a series of shipments to be secured by a single documentary LC.

A Revolving LC can achieve this by the LC being reinstated for the original amount after a given period, and allowing the value of the LC to be drawn each time a shipment of goods is undertaken.

Be aware that as this is a continuing liability, it will have an impact on banking facilities.

Advance Payments (or Red Clause)
An LC that contains a clause, which authorises the nominated bank to advance a portion of the value of the LC to the
Exporter before shipping documents are presented. This enables the Exporter to purchase raw materials or to pay other costs before receiving the full payment, once conforming documents have been presented.

Advances are made at the risk of the Importer. Drawings under an LC are made against a simple receipt from the Exporter that they will refund the amount if they do not ship the goods as required. The Importer's account is debited as soon as an advance has been made.

Standby
A Standby Letter of Credit is a type of trade debt guarantee that is only drawn against in the event that the Importer defaults in some way, eg. fails to pay for a consignment within an agreed period. A standby LC includes an expiry date, but no latest shipment date. Standby LCs will normally call for a statement of default from the Exporter and also
evidence of default. ‘Bank’ is happy to discuss whether or not a Standby Letter of Credit is appropriate to your needs.

Features & Benefits Documentary Letters of Credit

Gives Exporters guaranteed payment without affecting credit limits
Gives Importers more control over the terms of the trade - especially valuable with new suppliers
Enhances competitive position
Known payment date, currency and revenue, helps cashflow management
Could be used to help raise finance through discounting
May enable Importers to negotiate longer credit periods and attribute costs to the Exporter

The Documentary Letters of Credit (LC) Process

1. Importer & Exporter negotiate terms of the contract
2. Importer instructs their bank, the Issuing Bank, to open a LC in favour of the Exporter
3. Importer's Bank, the Issuing Bank, issue the LC to the Exporter's Bank, the Advising Bank
4. LC is received by Advising Bank which checks the LC, then passes it on to the Exporter
5. Goods are shipped
6. Shipping documents are prepared and submitted to the Advising Bank by the Exporter
7. Advising Bank checks the documents. If they comply with LC they send the documents to Issuing Bank and may pay the Beneficiary/ Exporter in advance of being reimbursed by the Issuing Bank
8. Issuing Bank checks documents again, if correct they are released to Importer and the Importer's account is debited
9. Issuing Bank reimburses Advising Bank
10. Payment sent to Beneficiary/Exporter if this didn't occur in stage seven


Key Stage 1. Importer & Exporter negotiate terms of the contract

Financial considerations
Supply Considerations
Shipping Considerations
Agreeing terms of LC
Financial considerations
Exporter:

Name and address of the Importer's bank
Status enquiry on the Importer. (Provided by one of ‘Bank’ registered credit rating companies)
Standing of Importer's bank (Confirming Bank)
Currency exchange rate fluctuation
Risk of non-payment by Importer's bank due to country risk (NB: Your ‘Bank’ contact can advise you about the banks and countries ‘Bank’ are happy to confirm, together with the applicable pricing).

Importer:
Importers will need to request a specific bank facility for Documentary Letters of Credit before any instructions can be issued. In assessing the level of facilities required, you will need to consider:
The anticipated turnover. The facility will need to cover the total value of LCs the Importer expects to have outstanding at any one time
The Importer's maximum potential period of liability. This includes both the maximum validity period of the LC and the maximum term of the contract. The Importer may need to allow the Exporter some 'lead time' in order to organise the goods ready for transportation
Currency exchange rate fluctuation.

To keep the costs of the transaction down, the Importer should keep the validity period and any extended credit terms as short as possible, thus reducing the overall level of facilities required.

Supply Considerations
Delivery periods on goods
Delays with particular goods (eg. through manufacturing delays)
Pre-shipment inspection.


Shipping Considerations
Methods of transport available, direct or indirect
Frequency of departures
Approximate costs of alternative methods/routes
Type of packing
Correct Incoterms (latest version) according to contract/transport mode.
Optimum delivery point, ie. transported from where to where?
Goods insurance
Delays for consular work or inspection formalities.

Agreeing Terms of LC
To reduce unnecessary costs and delays in?amending the Letter of Credit after it has been established, we strongly recommend that the Exporter sends the Importer a template of the terms and conditions that they wish to be included.

Key Stage 2. Importer instructs their bank, the Issuing Bank, to open an LC in favour of the Exporter
Application Form
Terms of Payment
Special Types of Letters of Credit
Application Form

At this stage the importer fills in the bank's Letter of Credit application form with full details to replicate the contract agreed with the Exporter. The importer must ensure the form avoids ambiguity, fully reflects the commercial contract and is not so complex as to make the transaction unworkable.

Terms of Payment
Documentary credits may be made available in one of four ways.

Sight Payment
This is where payment is made to the Exporter, upon presentation of conforming documents. A sight Bill of Exchange, also called a draft, is usually called for, though payment can be made against documents alone.

Deferred Payment
A deferred payment does not require the presentation of a draft. The Paying Bank is authorised to make payment at an agreed future date against presentation of conforming documents. The future date for payment is defined in the Letter of Credit usually as a number of days after the date of despatch of goods or after the date of presentation of the documents.

Acceptance
An Acceptance LC requires presentation of a draft drawn on the bank nominated as Accepting Bank. If the terms of the LC are met, the draft is then accepted by the bank and is payable at a determinable future date. This will be detailed in the Letter of Credit as either a fixed future date, or a specific number of days from the date of despatch of goods, or from the date of presentation of the documents.

Negotiation
With a Negotiable LC, the Issuing Bank must reimburse the bank which negotiates drafts or documents drawn under its documentary LC. The credit may be made freely negotiable with any bank, or negotiation may be restricted to a bank nominated by the issuing bank. Under this type of LC, the Exporter is responsible for any negotiation interest unless the Importer specifically authorises the Negotiating Bank to charge interest to their account.

Payment at the counters of the Issuing Bank
In this case the conforming documents have to be received by the Issuing Bank within the presentation period. Payment is only then made to the Beneficiary or Advising Bank.


Key Stage 3. Importer's Bank, the Issuing Bank, issue the LC to the Exporter's Bank, the Advising Bank

Assuming that the value of the Letter of Credit is within the Importers' facilities, their bank, the Issuing Bank, issues the Letter of Credit in favour of the Exporter.

Key Stage 4. LC is received by Advising Bank, which checks the LC, then passes it on to the Exporter

The Letter of Credit will be received by a bank in the Exporter's country, which will authenticate it and check that its terms and conditions are workable. They then pass the Letter of Credit on to the Exporter.

Please note that if the bank is merely passing the Letter of Credit on to the Exporter, they are known as the Advising Bank.

However, if the bank is adding their undertaking to pay, they become the Confirming Bank Accepting Bank.

Checking the LC & Amendments and Checking the LC

The Exporter, or Beneficiary, should make the following checks when the LC arrives to ensure that the terms match those originally agreed with the Importer.

1. Is the Letter of Credit subject to the latest version of the Uniform Customs and Practice for Documentary Credits (UCP) of the International Chamber of Commerce?
2. Check the authenticity of the LC
If LCs are received that depart from the routine of being sent to the Exporter from an Advising/Confirming Bank in the UK, they should be handled with caution. Likewise, if the UK bank is not recognised, check its authenticity with ‘Bank’.
3. Does the type of LC give the required level of security?
Is confirmation of the LC required? If so, establish whether the LC is in fact confirmed, thus carrying the extra and separate undertaking of a second bank, usually in the UK. Also establish whether it is revocable or irrevocable. Remember revocable LCs can be cancelled without the Exporter's prior knowledge. LCs issued under UCP500 are irrevocable unless otherwise stated.
4. Is the LC payable when and where requested?
The LC may specify payment at sight, ie. when the correct documents are presented to the Paying Bank, or at a later date, a set period of time after the documents have been accepted. The LC can either be made payable in the UK, with little or no delay after checking by the Paying Bank, or abroad with possible delays. With payment abroad please note that the Exporter is responsible for postal delays in presenting documents overseas within the time limits set by the expiry date.
5. Is the value of the LC correct?
Ensure the LC covers the full invoice value, incorporating any additional costs such as freight and/or inspection fees.
6. Are the Importer and Exporter's details correct?
Ensure the Exporter's name and address are spelt correctly and that they are shown exactly as they are on the invoice heading. Similarly, ensure the Importer's name and details are copied from the invoice.
7. Are the terms of shipment correct?
Ensure that the terms of shipment are the same as you quoted and that they match the price properly.
8. Are all the charges correct?
Ensure that only the bank charges that have been agreed to pay are stated. Pay particular attention to bank reimbursing charges with an LC not expressed in sterling.
9. Can the expiry date be met?
Ensure that the Exporter can present the documents within the terms of the LC.
10. Make sure that time is allowed for the following:
· production and packaging
· inspection
· shipment
· chamber of commerce and consular work
· obtaining the inspection certificate
· assembling and checking documents
· presenting documents to the bank.
· Note that the last four stages must be completed within the number of days as stated with the LC, taken as 21 days if no other time limit specified.
11. Can you provide the transport documents called for?
Ensure that you are able to provide any transport documents required.

Amendments

If the Letter of Credit is wrong or ambiguous in any way, or the Exporter cannot comply with any of the terms, the Exporter should contact the Importer to request that the LC is amended. If this is agreed, the Importer would then ask their bank to issue an amendment. If no amendment is made, there is a risk of non-payment.

If you are in doubt about any of the terms of the LC, always consult ‘Bank’ and/or the Advising Bank for advice. Also remember that only the Importer can authorise amendments or extensions through their bank.

It is advisable for an individual within the Exporter's company to act as a co-ordinator of progress of the transaction for the Letter of Credit between the insurance company, the freight forwarder and all departments within the company.

Key Stage 5. Goods are shipped

Goods should be despatched according to the specific terms of the Documentary Letter of Credit.

Key Stage 6. Shipping documents are prepared and submitted to the Advising Bank by the Exporter

When all details of the transaction have been decided, the goods are despatched. The Exporter then prepares the shipping documents and submits them to the Advising Bank.

Preparation of Shipping Documents
Submission of documents to the Advising Bank
Documents must all be in order
Preparation of Shipping Documents

When assembling the documents for presentation to the bank, the Exporter must make sure that the documents match the LC. The following must be ensured:

1. The Exporter has the correct number of copies and originals
Also ensure that they contain the information called for, that the title of all the documents is correct and they are issued by the party specified in the LC. The document name must match exactly what the LC calls for.

2. They are consistent with each other
The shipping marks, quantities/weights, transport details, references and general descriptions must all?be consistent to ensure?that they clearly relate to the same shipment.

3. The description of the goods is correct
Goods may be described in general terms in all documents except the invoice, where the exact LC description must be reproduced.

4. The documents are authenticated
Import regulations in some countries require the documents to be signed manually and any alterations or additions witnessed.

Submission of documents to the Advising Bank

Once prepared, the shipping documents need to be presented to the Advising Bank without delay. Be aware of the following:

The documents must be complete and delivered to the bank by close of business on the expiry date and within the transport document time limit, whichever is earlier
The transport document time limit is 21 days from the date of shipment unless the credit gives a longer or shorter period
The import license expiry date is important and it may not be possible to extend
If any discrepancies are found and they can be put right, the corrected documents must still be presented to the bank by the original expiry date and within the presentation period.

The following documents must all be in order

Transport Document
Ensure these include the right type of transport, places and ports, have the correct consignor and consignee, date of shipment and 'freight paid' notation.

Insurance Document
Ensure that this is of the correct type, amount and currency as stipulated in the LC. The date must be no later than the date of issue of the transport document, unless the insurance document clearly states that cover takes effect from the date of shipment/receipt of cargo, ie. warehouse-to-warehouse.

Invoice
The Importer and Exporter's names and details, the description of the goods and the clauses or statements must all appear exactly as they are in the LC. The value must not be more than the LC permits, though you can under certain conditions sometimes under-draw by up to 5%. A 5% variation is sometimes permitted, alternatively the LC may permit a specific variation such as an 'about' amount having a 10% variation.

Bills of Exchange
Ensure that the date, amount and currency are all correct, that the words and figures agree and that it is drawn on the correct party. Also check the endorsement, clause, and Letter of Credit reference number and ensure the signature identifies the signatory.

Covering note/letter to Advising bank
The note/letter must include the Exporter's contact details.
Include a request that the bank notifies any discrepancies by fax or telephone rather than mail. Indicate how to be paid and include account details. Provide details if the Exporter has a forward currency contract.

Any other documents
Ensure all other documents are from the correct issuer, have the correct wording and content, clearly relate to the goods invoiced and are all signed and endorsed as necessary.

Also ensure that all communications are correctly set out, addressed and dated and that no documents are enclosed that are not required

Key Stage 7. Advising Bank checks the documents. If they comply with LC they send the documents to Issuing Bank and may pay the Exporter in advance of being reimbursed by the Issuing Bank

When the documents are received by the Advising Bank, they are checked, then if correct, they are sent to the Issuing Bank.

When documents comply with the Letter of Credit
When documents do not comply to the Letter of Credit
Common discrepancies
When Documents comply with the Letter of Credit

If the Advising Bank is happy after checking the documents that they comply with the Letter of Credit, then the process of payment to the beneficiary can occur.

This process is dependent on where payment is stipulated in the original Letter of Credit.

If payment is stipulated to be at the Exporter's bank, then payment is released to the beneficiary on presentation and checking of the documents at the Exporter's bank
If payment is stipulated to be at the Importer's bank, then payment is released to the beneficiary only after the Issuing Bank has received the documents, checked them and then sent funds to the Advising Bank, who will then pass the payment to the Exporter.

When documents do not comply to the Letter of Credit

Discrepancies can occur between the documents presented and the terms and conditions expressed in the Letter of Credit.

If this does occur, the following courses of action are open to the Exporter:
Correct the discrepancy within the original expiry date.
If the Exporter is able to make any amendments within the original expiry date and presentation period then this is acceptable. Any alteration to the documents must be authorised by the party that issued them. If possible a clean document should be obtained.

Ask for payment despite discrepancies.

The Advising Bank can be asked to contact the Issuing Bank for permission to effect payment despite discrepancies in the documents. This can take a little time and the costs must be met by the Exporter, however, it can produce a final result more quickly.
Send documents on 'inspection'. “ Approval Basis”

This can occur within the security of the LC, but cashflow is seriously hindered and an unscrupulous Importer may try to take advantage by offering a reduced price for a quick settlement against documents 'as presented'. With documents 'on inspection' the bank should be requested to instruct the Issuing Bank that release of the documents to the Importer is to be only against payment being authorised.

Please Note:
The above measures normally allow the Exporter to retain control over the goods depending on the circumstances as the Importer often cannot take delivery without the documents, which are still in the Exporters control ?. However the Importer is in effect being asked if they still want the goods but are prepared to accept the discrepancies in the documents. They are still quite free to refuse.

Please note:
When the above documents and any other documents are required by a Letter of Credit, they should:
Comply with the stipulated conditions of the LC
Be properly signed
Have all alterations properly authenticated
Be marked on their face as 'original' except those which the LC specifically state can be copies.

Key Stage 8. Issuing Bank checks documents again, if correct they are released to Importer and the Importer's account is debited

The Issuing Bank, or Importer's bank, again checks documents and providing that they comply with all the terms and conditions, and are correct, they are released to the Importer and the Importer's account is debited

Key Stage 9. Issuing Bank reimburses Advising Bank

The Issuing Bank, ie. the Importer's bank then reimburses the Exporter's bank, the Advising Bank.

Common Discrepancies

All mistakes cause extra work and are sometimes accompanied by additional charges. They can also lead to delays in receiving payment, price reductions and even the avoidance of liability by the Importer altogether.

To help avoid discrepancies, we have highlighted the common mistakes for the documents below.

Bill of Exchange
Drawn incorrectly, or the amount differs from that of the invoice.
Capacity of the signatories is not stated if required.
Not endorsed or incorrectly endorsed.

Invoice
Description of the goods differs from that in the LC.
Amount differs from that of the LC.
Amount differs from that of the Bill of Exchange.
Prices of goods differ from those indicated in the LC.
Price basis and shipment terms omitted.
Extra charges included that are not specified in the LC.
Is not certified, notarised or signed as required by the credit.
Does not contain a declaration required under the LC.
Importer's name differs from that mentioned in the LC.
Is not issued by the Exporter.
Be consistent with each other.

Bill of Lading
Not presented in full set when requested.
Alterations not authenticated by an official of the shipping company or its agents.
Is not clean, ie. carries remarks that the condition and/or the packaging of the merchandise is defective.
Is not marked 'on board' when so required.
'On board' notation not dated.
Is not endorsed by the Exporter when drawn 'to order'.
Is not marked 'freight paid' as stipulated in the LC in respect of Cost & Freight and Cost Insurance & Freight contracts.
Is made out 'to order' when the LC stipulated 'direct to consignee' (Importer) and vice versa.
Is dated later than the latest shipping date specified in the LC.
Is not presented within 21 days after date of shipment or such time as specified in the LC.
Description of goods other than that specified in the LC.
Rate at which freight is calculated, and total amount, not shown when LC requires these details.

The following are only acceptable if expressly allowed in the Letter of Credit:
Shipment 'on deck', ie. the goods are not stored in the hold.
Shipment from a port or to a destination other than that stipulated.
Presentation of types of Bills of Lading not specifically authorised in the LC, eg. a Charter party Bill of Lading, or a Forwarding agent's Bill of Lading.


Insurance
Amount of cover is sufficient.
Does not include risks mentioned in the LC.
Is not endorsed by the insured and/or signed by the insurers.
Certificate or policy bears a date later than the date of shipment/despatch, except where warehouse-to-warehouse is indicated.
Incorrect description of goods.
Alterations are not authenticated.
Is not in transferable form when required.
Carrying vessel's name not recorded.
Does not cover transhipment when Bills of Lading indicate it will take place.

Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600

Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600

Article 1 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.

Article 2 Definitions
For the purpose of these rules:

Advising bank means the bank that advises the credit at the request of the issuing bank.

Applicant means the party on whose request the credit is issued.

Banking day means a day on which a bank is regularly open at the place at which an act subject to these rules is to be performed.

Beneficiary means the party in whose favour a credit is issued.

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.

Confirmation means a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.

Confirming bank means the bank that adds its confirmation to a credit upon the issuing bank’s authorization or request.

Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.

Honour means:

a. to pay at sight if the credit is available by sight payment.

b. to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment.

c. to accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the credit is available by acceptance.



Issuing bank means the bank that issues a credit at the request of an applicant or on its own behalf.

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(to be paid the nominated bank.

Nominated bank means the bank with which the credit is available or any bank in the case of a credit available with any bank.

Presentation means either the delivery of documents under a credit to the issuing bank or nominated bank or the documents so delivered.

Presenter means a beneficiary, bank or other party that makes a presentation.


Article 3 Interpretations

For the purpose of these rules:

Where applicable, words in the singular include the plural and in the plural include the singular.

A credit is irrevocable even if there is no indication to that effect.

A document may be signed by handwriting, facsimile signature, perforated signature, stamp, symbol or any other mechanical or electronic method of authentication.

A requirement for a document to be legalized, visaed, certified or similar will be satisfied by any signature, mark, stamp or label on the document which appears to satisfy that requirement.

Branches of a bank in different countries are considered to be separate banks.

Terms such as "first class", "well known", "qualified", "independent", "official", "competent" or "local" used to describe the issuer of a document allow any issuer except the beneficiary to issue that document.

Unless required to be used in a document, words such as "prompt", "immediately" or "as soon as possible" will be disregarded.

The expression "on or about" or similar will be interpreted as a stipulation that an event is to occur during a period of five calendar days before until five calendar days after the specified date, both start and end dates included.

The words "to", "until", "till", “from” and “between” when used to determine a period of shipment include the date or dates mentioned, and the words “before” and "after" exclude the date mentioned.

The words “from” and "after" when used to determine a maturity date exclude the date mentioned.

The terms "first half" and "second half" of a month shall be construed respectively as the 1st to the 15th and the 16th to the last day of the month, all dates inclusive.

The terms "beginning", "middle" and "end" of a month shall be construed respectively as the 1st to the 10th, the 11th to the 20th and the 21st to the last day of the month, all dates inclusive.


Article 4 Credits v. Contracts

a. A credit by its nature is a separate transaction from the sale or other contract on which it may be based. Banks are in no way concerned with or bound by such contract, even if any reference whatsoever to it is included in the credit. Consequently, the undertaking of a bank to honour, to negotiate or to fulfil any other obligation under the credit is not subject to claims or defences by the applicant resulting from its relationships with the issuing bank or the beneficiary.
A beneficiary can in no case avail itself of the contractual relationships existing between banks or between the applicant and the issuing bank.

b. An issuing bank should discourage any attempt by the applicant to include, as an integral part of the credit, copies of the underlying contract, proforma invoice and the like.


Article 5 Documents v. Goods, Services or Performance

Banks deal with documents and not with goods, services or performance to which the documents may relate .


Article 6 Availability, Expiry Date and Place for Presentation

a. A credit must state the bank with which it is available or whether it is available with any bank. A credit available with a nominated bank is also available with the issuing bank.

b. A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation.

c. A credit must not be issued available by a draft drawn on the applicant.

d. i. A credit must state an expiry date for presentation. An expiry date stated for honour or negotiation will be deemed to be an expiry date for presentation.

ii. The place of the bank with which the credit is available is the place for presentation. The place for presentation under a credit available with any bank is that of any bank. A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank.

e. Except as provided in sub-article 29 (a), a presentation by or on behalf of the beneficiary must be made on or before the expiry date.

Article 7 Issuing Bank Undertaking

a. Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by:

i. sight payment, deferred payment or acceptance with the issuing bank;

ii. sight payment with a nominated bank and that nominated bank does not pay;

iii. deferred payment with a nominated bank and that nominated bank does not incur its deferred payment undertaking or, having incurred its deferred payment undertaking, does not pay at maturity;

iv. acceptance with a nominated bank and that nominated bank does not accept a draft drawn on it or, having accepted a draft drawn on it, does not pay at maturity;

v. negotiation with a nominated bank and that nominated bank does not negotiate.

b. An issuing bank is irrevocably bound to honour as of the time it issues the credit.

c. An issuing bank undertakes to reimburse a nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the issuing bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not the nominated bank prepaid or purchased before maturity. An issuing bank's undertaking to reimburse a nominated bank is independent of the issuing bank’s undertaking to the beneficiary.


Article 8 Confirming Bank Undertaking

a. Provided that the stipulated documents are presented to the confirming bank or to any other nominated bank and that they constitute a complying presentation, the confirming bank must:

i. honour, if the credit is available by：

a. sight payment, deferred payment or acceptance with the confirming bank;

b. sight payment with another nominated bank and that nominated bank does not pay;

c. deferred payment with another nominated bank and that nominated bank does not incur its deferred payment undertaking or, having incurred its deferred payment undertaking, does not pay at maturity;

d. acceptance with another nominated bank and that nominated bank does not accept a draft drawn on it or, having accepted a draft drawn on it, does not pay at maturity;

e. negotiation with another nominated bank and that nominated bank does not negotiate.

ii. negotiate, without recourse无追索权, if the credit is available by negotiation with the confirming bank.

b. A confirming bank is irrevocably bound to honour or negotiate as of the time it adds its confirmation to the credit.

c. A confirming bank undertakes to reimburse another nominated bank that has honoured or negotiated a complying presentation and forwarded the documents to the confirming bank. Reimbursement for the amount of a complying presentation under a credit available by acceptance or deferred payment is due at maturity, whether or not another nominated bank prepaid or purchased before maturity. A confirming bank's undertaking to reimburse another nominated bank is independent of the confirming bank’s undertaking to the beneficiary.

d. If a bank is authorized or requested by the issuing bank to confirm a credit but is not prepared to do so, it must inform the issuing bank without delay and may advise the credit without confirmation.

Article 9 Advising of Credits and Amendments

a. A credit and any amendment may be advised to a beneficiary through an advising bank. An advising bank that is not a confirming bank advises the credit and any amendment without any undertaking to honour or negotiate.

b. By advising the credit or amendment, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit or amendment and that the advice accurately reflects the terms and conditions of the credit or amendment received.

c. An advising bank may utilize the services of another bank (“second advising bank”) to advise the credit and any amendment to the beneficiary. By advising the credit or amendment, the second advising bank signifies that it has satisfied itself as to the apparent authenticity of the advice it has received and that the advice accurately reflects the terms and conditions of the credit or amendment received.

d. A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.

e. If a bank is requested to advise a credit or amendment but elects not to do so, it must so inform, without delay, the bank from which the credit, amendment or advice has been received.

f. If a bank is requested to advise a credit or amendment but cannot satisfy itself as to the apparent authenticity of the credit, the amendment or the advice, it must so inform, without delay, the bank from which the instructions appear to have been received. If the advising bank or second advising bank elects nonetheless to advise the credit or amendment, it must inform the beneficiary or second advising bank that it has not been able to satisfy itself as to the apparent authenticity of the credit, the amendment or the advice.

Article 10 Amendments

a. Except as otherwise provided by article 38, a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank, if any, and the beneficiary.

b. An issuing bank is irrevocably bound by an amendment as of the time it issues the amendment. A confirming bank may extend its confirmation to an amendment and will be irrevocably bound as of the time it advises the amendment. A confirming bank may, however, choose to advise an amendment without extending its confirmation and, if so, it must inform the issuing bank without delay and inform the beneficiary in its advice.

c. The terms and conditions of the original credit (or a credit incorporating previously accepted amendments) will remain in force for the beneficiary until the beneficiary communicates its acceptance of the amendment to the bank that advised such amendment. The beneficiary should give notification of acceptance or rejection of an amendment. If the beneficiary fails to give such notification, a presentation that complies with the credit and to any not yet accepted amendment will be deemed to be notification of acceptance by the beneficiary of such amendment. As of that moment the credit will be amended.

d. A bank that advises an amendment should inform the bank from which it received the amendment of any notification of acceptance or rejection.

e. Partial acceptance of an amendment is not allowed and will be deemed to be notification of rejection of the amendment.

f. A provision in an amendment to the effect that the amendment shall enter into force unless rejected by the beneficiary within a certain time shall be disregarded.

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.

Article 12 Nomination

a. Unless a nominated bank is the confirming bank, an authorization to honour or negotiate does not impose any obligation on that nominated bank to honour or negotiate, except when expressly agreed to by that nominated bank and so communicated to the beneficiary.

b. By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank.

c. Receipt or examination and forwarding of documents by a nominated bank that is not a confirming bank does not make that nominated bank liable to honour or negotiate, nor does it constitute honour or negotiation.

Article 13 Bank-to-Bank Reimbursement Arrangements

a. If a credit states that reimbursement is to be obtained by a nominated bank ("claiming bank") claiming on another party ("reimbursing bank"), the credit must state if the reimbursement is subject to the ICC rules for bank-to-bank reimbursements in effect on the date of issuance of the credit.

b. If a credit does not state that reimbursement is subject to the ICC rules for bank-to-bank reimbursements, the following apply:

i. An issuing bank must provide a reimbursing bank with a reimbursement authorization that conforms with the availability stated in the credit. The reimbursement authorization should not be subject to an expiry date.

ii. A claiming bank shall not be required to supply a reimbursing bank with a certificate of compliance with the terms and conditions of the credit.

iii. An issuing bank will be responsible for any loss of interest, together with any expenses incurred, if reimbursement is not provided on first demand by a reimbursing bank in accordance with the terms and conditions of the credit.

iv. A reimbursing bank's charges are for the account of the issuing bank. However, if the charges are for the account of the beneficiary, it is the responsibility of an issuing bank to so indicate in the credit and in the reimbursement authorization. If a reimbursing bank's charges are for the account of the beneficiary, they shall be deducted from the amount due to a claiming bank when reimbursement is made. If no reimbursement is made, the reimbursing bank's charges remain the obligation of the issuing bank.

c. An issuing bank is not relieved of any of its obligations to provide reimbursement if reimbursement is not made by a reimbursing bank on first demand.

Article 14 Standard for Examination of Documents

a. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank must examine a presentation to determine, on the basis of the documents alone, whether or not the documents appear on their face to constitute a complying presentation.

b. A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying. This period is not curtailed or otherwise affected by the occurrence on or after the date of presentation of any expiry date or last day for presentation.

c. A presentation including one or more original transport documents subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as described in these rules, but in any event not later than the expiry date of the credit.

d. Data in a document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated document or the credit.

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.

f. If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).

g. A document presented but not required by the credit will be disregarded and may be returned to the presenter.

h. If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it.

i. A document may be dated prior to the issuance date of the credit, but must not be dated later than its date of presentation.

j. When the addresses of the beneficiary and the applicant appear in any stipulated document, they 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. Contact details (telefax, telephone, email and the like) stated as part of the beneficiary’s and the applicant’s address will be disregarded. However, when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19, 20, 21, 22, 23, 24 or 25, they must be as stated in the credit.

k. The shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit.

l. A transport document may be issued by any party other than a carrier, owner, master or charterer provided that the transport document meets the requirements of articles 19, 20, 21, 22, 23 or 24 of these rules.

Article 15 Complying Presentation

a. When an issuing bank determines that a presentation is complying, it must honour.

b. When a confirming bank determines that a presentation is complying, it must honour or negotiate and forward the documents to the issuing bank.

c. When a nominated bank determines that a presentation is complying and honours or negotiates, it must forward the documents to the confirming bank or issuing bank.

Article 16 Discrepant Documents, Waiver and Notice

a. When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank determines that a presentation does not comply, it may refuse to honour or negotiate.

b. When an issuing bank determines that a presentation does not comply, it may in its sole judgement approach the applicant for a waiver of the discrepancies. This does not, however, extend the period mentioned in sub-article 14 (b).

c. When a nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank decides to refuse to honour or negotiate, it must give a single notice to that effect to the presenter.

The notice must state:

i. that the bank is refusing to honour or negotiate; and

ii. each discrepancy in respect of which the bank refuses to honour or negotiate; and

iii. a) that the bank is holding the documents pending further instructions from the presenter; or

b) that the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or receives further instructions from the presenter prior to agreeing to accept a waiver; or

c) that the bank is returning the documents; or

d) that the bank is acting in accordance with instructions previously received from the presenter.

d. The notice required in sub-article 16 (c) must be given by telecommunication or, if that is not possible, by other expeditious means no later than the close of the fifth banking day following the day of presentation.

e. A nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may, after providing notice required by sub-article 16 (c) (iii) (a) or (b), return the documents to the presenter at any time.

f. If an issuing bank or a confirming bank fails to act in accordance with the provisions of this article, it shall be precluded from claiming that the documents do not constitute a complying presentation.

g. When an issuing bank refuses to honour or a confirming bank refuses to honour or negotiate and has given notice to that effect in accordance with this article, it shall then be entitled to claim a refund, with interest, of any reimbursement made.

Article 17 Original Documents and Copies

a. At least one original of each document stipulated in the credit must be presented.

b. A bank shall treat as an original any document bearing an apparently original signature, mark, stamp, or label of the issuer of the document, unless the document itself indicates that it is not an original.

c. Unless a document indicates otherwise另外的, a bank will also accept a document as original if it:

i. appears to be written, typed, perforated or stamped by the document issuer’s hand; or

ii. appears to be on the document issuer’s original stationery; or

iii. states that it is original, unless the statement appears not to apply to the document presented.

d. If a credit requires presentation of copies of documents, presentation of either originals or copies is permitted.

e. If a credit requires presentation of multiple documents by using terms such as "in duplicate", "in two fold" or "in two copies", this will be satisfied by the presentation of at least one original and the remaining number in copies, except when the document itself indicates otherwise.

Article 18 Commercial Invoice

a. A commercial invoice:

i. must appear to have been issued by the beneficiary (except as provided in article 38);

ii. must be made out in the name of the applicant (except as provided in sub-article 38 (g));

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

iv. need not be signed.

b. A nominated bank acting on its nomination, a confirming bank, if any, or the issuing bank may accept a commercial invoice issued for an amount in excess of the amount permitted by the credit, and its decision will be binding upon all parties, provided the bank in question has not honoured or negotiated for an amount in excess of that permitted by the credit.

c. The description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit.


Article 19 Transport Document Covering at Least Two Different Modes of Transport

a. A transport document covering at least two different modes of transport (multimodal or combined transport document), however named, must appear to:

i. 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, master or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.

ii. indicate that the goods have been dispatched, taken in charge or shipped on board at the place stated in the credit, by:

• pre-printed wording, or

• a stamp or notation indicating the date on which the goods have been dispatched, taken in charge or shipped on board.

The date of issuance of the transport document will be deemed to be the date of dispatch, taking in charge or shipped on board, and the date of shipment. However, if the transport document indicates, by stamp or notation, a date of dispatch, taking in charge or shipped on board, this date will be deemed to be the date of shipment.

iii. indicate the place of dispatch, taking in charge or shipment and the place of final destination stated in the credit, even if:

a. the transport document states, in addition, a different place of dispatch, taking in charge or shipment or place of final destination, or

b. the transport document contains the indication "intended" or similar qualification in relation to the vessel, port of loading or port of discharge.

iv. be the sole original transport document or, if issued in more than one original, be the full set as indicated on the transport document.

v. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back transport document). Contents of terms and conditions of carriage will not be examined.

vi. contain no indication that it is subject to a charter party.

b. For the purpose of this article, transhipment means unloading from one means of conveyance and reloading to another means of conveyance (whether or not in different modes of transport) during the carriage from the place of dispatch, taking in charge or shipment to the place of final destination stated in the credit.

c. i. A transport document may indicate that the goods will or may be transhipped provided that the entire carriage is covered by one and the same transport document.

ii. A transport document indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment.


Article 20 Bill of Lading

a. A bill of lading, however named, must appear to:

i. 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, master or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.

ii. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:

• pre-printed wording, or

• an on board notation indicating the date on which the goods have been shipped on board.

The date of issuance of the bill of lading will be deemed to be the date of shipment unless the bill of lading contains an on board notation indicating the date of shipment, in which case the date stated in the on board notation will be deemed to be the date of shipment.

If the bill of lading contains the indication "intended vessel" or similar qualification in relation to the name of the vessel, an on board notation indicating the date of shipment and the name of the actual vessel is required.

iii. indicate shipment from the port of loading to the port of discharge stated in the credit.

If the bill of lading does not indicate the port of loading stated in the credit as the port of loading, or if it contains the indication “intended” or similar qualification in relation to the port of loading, an on board notation indicating the port of loading as stated in the credit, the date of shipment and the name of the vessel is required. This provision applies even when loading on board or shipment on a named vessel is indicated by pre-printed wording on the bill of lading.

iv. be the sole original bill of lading or, if issued in more than one original, be the full set as indicated on the bill of lading.

iv. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back bill of lading). Contents of terms and conditions of carriage will not be examined.

vi. contain no indication that it is subject to a charter party.

b. For the purpose of this article, transhipment means unloading from one vessel and reloading to another vessel during the carriage from the port of loading to the port of discharge stated in the credit.

c. i. A bill of lading may indicate that the goods will or may be transhipped provided that the entire carriage is covered by one and the same bill of lading.

ii. A bill of lading indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment, if the goods have been shipped in a container, trailer or LASH barge as evidenced by the bill of lading.

d. Clauses in a bill of lading stating that the carrier reserves the right to tranship will be disregarded.


Article 21 Non-Negotiable Sea Waybill

a. A non-negotiable sea waybill, however named, must appear to:

i. 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, master or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the carrier or for or on behalf of the master.

ii. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:

• pre-printed wording, or

• an on board notation indicating the date on which the goods have been shipped on board.

The date of issuance of the non-negotiable sea waybill will be deemed to be the date of shipment unless the non-negotiable sea waybill contains an on board notation indicating the date of shipment, in which case the date stated in the on board notation will be deemed to be the date of shipment.

If the non-negotiable sea waybill contains the indication "intended vessel" or similar qualification in relation to the name of the vessel, an on board notation indicating the date of shipment and the name of the actual vessel is required.

iii. indicate shipment from the port of loading to the port of discharge stated in the credit.

If the non-negotiable sea waybill does not indicate the port of loading stated in the credit as the port of loading, or if it contains the indication “intended” or similar qualification in relation to the port of loading, an on board notation indicating the port of loading as stated in the credit, the date of shipment and the name of the vessel is required. This provision applies even when loading on board or shipment on a named vessel is indicated by pre-printed wording on the non-negotiable sea waybill.
iv. be the sole original non-negotiable sea waybill or, if issued in more than one original, be the full set as indicated on the non-negotiable sea waybill.

v. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back non-negotiable sea waybill). Contents of terms and conditions of carriage will not be examined.

vi. contain no indication that it is subject to a charter party.

b. For the purpose of this article, transhipment means unloading from one vessel and reloading to another vessel during the carriage from the port of loading to the port of discharge stated in the credit.

c. i. A non-negotiable sea waybill may indicate that the goods will or may be transhipped provided that the entire carriage is covered by one and the same non-negotiable sea waybill.

ii. A non-negotiable sea waybill indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment, if the goods have been shipped in a container, trailer or LASH barge子母船 as evidenced by the non-negotiable sea waybill.

d. Clauses in a non-negotiable sea waybill stating that the carrier reserves the right to tranship will be disregarded.

Article 22 Charter Party Bill of Lading

a. A bill of lading, however named, containing an indication that it is subject to a charter party (charter party bill of lading), must appear to:

i. be signed by:

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

• the owner or a named agent for or on behalf of the owner, or

• the charterer or a named agent for or on behalf of the charterer.

Any signature by the master, owner, charterer or agent must be identified as that of the master, owner, charterer or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the master, owner or charterer.

An agent signing for or on behalf of the owner or charterer must indicate the name of the owner or charterer.

ii. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit by:

• pre-printed wording, or

• an on board notation indicating the date on which the goods have been shipped on board.

The date of issuance of the charter party bill of lading will be deemed to be the date of shipment unless the charter party bill of lading contains an on board notation indicating the date of shipment, in which case the date stated in the on board notation will be deemed to be the date of shipment.

iii. indicate shipment from the port of loading to the port of discharge stated in the credit. The port of discharge may also be shown as a range of ports or a geographical area, as stated in the credit.

iv. be the sole original charter party bill of lading or, if issued in more than one original, be the full set as indicated on the charter party bill of lading.

b. A bank will not examine charter party contracts, even if they are required to be presented by the terms of the credit.

Article 23 Air Transport Document

a. An air transport document, however named, must appear to:
i. indicate the name of the carrier and be signed by:

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

Any signature by the carrier or agent must be identified as that of the carrier or agent.

Any signature by an agent must indicate that the agent has signed for or on behalf of the carrier.

ii. indicate that the goods have been accepted for carriage.

iii. indicate the date of issuance. This date will be deemed to be the date of shipment unless the air transport document contains a specific notation of the actual date of shipment, in which case the date stated in the notation will be deemed to be the date of shipment.

Any other information appearing on the air transport document relative to the flight number and date will not be considered in determining the date of shipment.

iv. indicate the airport of departure and the airport of destination stated in the credit.

v. be the original for consignor or shipper, even if the credit stipulates a full set of originals.

vi. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage. Contents of terms and conditions of carriage will not be examined.

b. For the purpose of this article, transhipment means unloading from one aircraft and reloading to another aircraft during the carriage from the airport of departure to the airport of destination stated in the credit.

c. i. An air transport document may indicate that the goods will or may be transhipped, provided that the entire carriage is covered by one and the same air transport document.

ii. An air transport document indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment.


Article 24 Road, Rail or Inland Waterway Transport Documents

a. A road, rail or inland waterway transport document, however named, must appear to:

i. indicate the name of the carrier and:

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

• indicate receipt of the goods by signature, stamp or notation by the carrier or a named agent for or on behalf of the carrier.

Any signature, stamp or notation of receipt of the goods by the carrier or agent must be identified as that of the carrier or agent.

Any signature, stamp or notation of receipt of the goods by the agent must indicate that the agent has signed or acted for or on behalf of the carrier.

If a rail transport document does not identify the carrier, any signature or stamp of the railway company will be accepted as evidence of the document being signed by the carrier.

ii. indicate the date of shipment or the date the goods have been received for shipment, dispatch or carriage at the place stated in the credit. Unless the transport document contains a dated reception、stamp, an indication of the date of receipt or a date of shipment, the date of issuance of the transport document will be deemed to be the date of shipment.

iii. indicate the place of shipment and the place of destination stated in the credit.

b. i. A road transport document must appear to be the original for consignor or shipper or bear no marking indicating for whom the document has been prepared.

ii. A rail transport document marked “duplicate” will be accepted as an original.

iii. A rail or inland waterway transport document will be accepted as an original whether marked as an original or not.

c. In the absence of an indication on the transport document as to the number of originals issued, the number presented will be deemed to constitute a full set.

d. For the purpose of this article, transhipment means unloading from one means of conveyance and reloading to another means of conveyance, within the same mode of transport, during the carriage from the place of shipment, dispatch or carriage to the place of destination stated in the credit.

e. i. A road, rail or inland waterway transport document may indicate that the goods will or may be transhipped provided that the entire carriage is covered by one and the same transport document.

ii. A road, rail or inland waterway transport document indicating that transhipment will or may take place is acceptable, even if the credit prohibits transhipment.

Article 25 Courier Receipt, Post Receipt or Certificate of Posting

a. A courier receipt, however named, evidencing receipt of goods for transport, must appear to:

i. indicate the name of the courier service and be stamped or signed by the named courier service at the place from which the credit states the goods are to be shipped; and

ii. indicate a date of pick-up or of receipt or wording to this effect. This date will be deemed to be the date of shipment.

b. A requirement that courier charges are to be paid or prepaid may be satisfied by a transport document issued by a courier service evidencing that courier charges are for the account of a party other than the consignee.

c. A post receipt or certificate of posting, however named, evidencing receipt of goods for transport, must appear to be stamped or signed and dated at the place from which the credit states the goods are to be shipped. This date will be deemed to be the date of shipment.


Article 26 "On Deck", "Shipper's Load and Count", “Said by Shipper to Contain” and Charges Additional to Freight

a. A transport document must not indicate that the goods are or will be loaded on deck. A clause on a transport document stating that the goods may be loaded on deck is acceptable.

b. A transport document bearing a clause such as "shipper's load and count" and "said by shipper to contain" is acceptable.

c. A transport document may bear a reference, by stamp or otherwise, to charges additional to the freight.


Article 27 Clean Transport Document

A bank will only accept a clean transport document. A clean transport document is one bearing no clause or notation expressly declaring a defective condition of the goods or their packaging. The word “clean” need not appear on a transport document, even if a credit has a requirement for that transport document to be “clean on board”.


Article 28 Insurance Document and Coverage

a. An insurance document, such as an insurance policy, an insurance certificate or a declaration under an open cover, must appear to be issued and signed by an insurance company, an underwriter or their agents or their proxies.

Any signature by an agent or proxy must indicate whether the agent or proxy has signed for or on behalf of the insurance company or underwriter.

b. When the insurance document indicates that it has been issued in more than one original, all originals must be presented.

c. Cover notes will not be accepted.

d. An insurance policy is acceptable in lieu of an insurance certificate or a declaration under an open cover.

e. The date of the insurance document must be no later than the date of shipment, unless it appears from the insurance document that the cover is effective from a date not later than the date of shipment.

f. i. The insurance document must indicate the amount of insurance coverage and be in the same currency as the credit.

ii. A requirement in the credit for insurance coverage to be for a percentage of the value of the goods, of the invoice value or similar is deemed to be the minimum amount of coverage required.

If there is no indication in the credit of the insurance coverage required, the amount of insurance coverage must be at least 110% of the CIF or CIP value of the goods.

When the CIF or CIP value cannot be determined from the documents, the amount of insurance coverage must be calculated on the basis of the amount for which honour or negotiation is requested or the gross value of the goods as shown on the invoice, whichever is greater.

iii. The insurance document must indicate that risks are covered at least between the place of taking in charge or shipment and the place of discharge or final destination as stated in the credit.

g. A credit should state the type of insurance required and, if any, the additional risks to be covered. An insurance document will be accepted without regard to any risks that are not covered if the credit uses imprecise terms such as “usual risks” or “customary risks”.

h. When a credit requires insurance against “all risks” and an insurance document is presented containing any “all risks” notation or clause, whether or not bearing the heading “all risks”, the insurance document will be accepted without regard to any risks stated to be excluded.

i. An insurance document may contain reference to any exclusion clause.

j. An insurance document may indicate that the cover is subject to a franchise or excess (deductible).


Article 29 Extension of Expiry Date or Last Day for Presentation

a. If the expiry date of a credit or the last day for presentation falls on a day when the bank to which presentation is to be made is closed for reasons other than those referred to in article 36, the expiry date or the last day for presentation, as the case may be, will be extended to the first following banking day.

b. If presentation is made on the first following banking day, a nominated bank must provide the issuing bank or confirming bank with a statement on its covering schedule that the presentation was made within the time limits extended in accordance with sub-article 29 (a).

c. The latest date for shipment will not be extended as a result of sub-article 29 (a).





Article 30 Tolerance in Credit Amount, Quantity and Unit Prices

a. The words "about" or "approximately" used in connection with the amount of the credit or the quantity or the unit price stated in the credit are to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer.

b. A tolerance not to exceed 5% more or 5% less than the quantity of the goods is allowed, provided the credit does not state the quantity in terms of a stipulated number of packing units or individual items and the total amount of the drawings does not exceed the amount of the credit.

c. Even when partial shipments are not allowed, a tolerance not to exceed 5% less than the amount of the credit is allowed, provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not reduced or that sub-article 30 (b) is not applicable. This tolerance does not apply when the credit stipulates a specific tolerance or uses the expressions referred to in sub-article 30 (a).

Article 31 Partial Drawings or Shipments

a. Partial drawings or shipments are allowed.

b. A presentation consisting of more than one set of transport documents evidencing shipment commencing on the same means of conveyance and for the same journey, provided they indicate the same destination, will not be regarded as covering a partial shipment, even if they indicate different dates of shipment or different ports of loading, places of taking in charge or dispatch. If the presentation consists of more than one set of transport documents, the latest date of shipment as evidenced on any of the sets of transport documents will be regarded as the date of shipment. A presentation consisting of one or more sets of transport documents evidencing shipment on more than one means of conveyance within the same mode of transport will be regarded as covering a partial shipment, even if the means of conveyance leave on the same day for the same destination.

c. A presentation consisting of more than one courier receipt, post receipt or certificate of posting will not be regarded as a partial shipment if the courier receipts, post receipts or certificates of posting appear to have been stamped or signed by the same courier or postal service at the same place and date and for the same destination.


Article 32 Instalment Drawings or Shipments

If a drawing or shipment by instalments within given periods is stipulated in the credit and any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available for that and any subsequent instalment.

Article 33 Hours of Presentation

A bank has no obligation to accept a presentation outside of its banking hours.


Article 34 Disclaimer on Effectiveness of Documents

A bank assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for the good faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other person.


Article 35 Disclaimer on Transmission and Translation

A bank assumes no liability or responsibility for the consequences arising out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in the credit.

If a nominated bank determines that a presentation is complying and forwards the documents to the issuing bank or confirming bank, whether or not the nominated bank has honoured or negotiated, an issuing bank or confirming bank must honour or negotiate, or reimburse that nominated bank, even when the documents have been lost in transit between the nominated bank and the issuing bank or confirming bank, or between the confirming bank and the issuing bank.

A bank assumes no liability or responsibility for errors in translation or interpretation of technical terms and may transmit credit terms without translating them.


Article 36 Force Majeure

A bank assumes no liability or responsibility for the consequences arising out of the interruption of its business by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes beyond its control.

A bank will not, upon resumption of its business, honour or negotiate under a credit that expired during such interruption of its business.



Article 37 Disclaimer for Acts of an Instructed Party

a. A bank utilizing 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.

b. An issuing bank or advising bank assumes no liability or responsibility should the instructions it transmits to another bank not be carried out, even if it has taken the initiative in the choice of that other bank.

c. A bank instructing another bank to perform services is liable for any commissions, fees, costs or expenses (“charges”) incurred by that bank in connection with its instructions.

If a credit states that charges are for the account of the beneficiary and charges cannot be collected or deducted from proceeds, the issuing bank remains liable for payment of charges.

A credit or amendment should not stipulate that the advising to a beneficiary is conditional upon the receipt by the advising bank or second advising bank of its charges.

d. The applicant shall be bound by and liable to indemnify a bank against all obligations and responsibilities imposed by foreign laws and usages.


Article 38 Transferable Credits

a. A bank is under no obligation to transfer a credit except to the extent and in the manner expressly consented to by that bank.

b. For the purpose of this article:

Transferable credit means a credit that specifically 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”).

Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specifically authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be a transferring bank.

Transferred credit means a credit that has been made available by the transferring bank to a second beneficiary.

c. Unless otherwise agreed at the time of transfer, all charges (such as commissions, fees, costs or expenses) incurred in respect of a transfer must be paid by the first beneficiary.

d. A credit may be transferred in part to more than one second beneficiary provided partial drawings or shipments are allowed.

A transferred credit cannot be transferred at the request of a second beneficiary to any subsequent beneficiary. The first beneficiary is not considered to be a subsequent beneficiary.

e. Any request for transfer must indicate if and under what conditions amendments may be advised to the second beneficiary. The transferred credit must clearly indicate those conditions.

f. If a credit is transferred to more than one second beneficiary, rejection of an amendment by one or more second beneficiary does not invalidate the acceptance by any other second beneficiary, with respect to which the transferred credit will be amended accordingly. For any second beneficiary that rejected the amendment, the transferred credit will remain unamended.

g. The transferred credit must accurately reflect the terms and conditions of the credit, including confirmation, if any, with the exception of:

- the amount of the credit,

- any unit price stated therein,

- the expiry date,

- the period for presentation, or

- the latest shipment date or given period for shipment,

any or all of which may be reduced or curtailed.


The percentage for which insurance cover must be effected may be increased to provide the amount of cover stipulated in the credit or these articles.

The name of the first beneficiary may be substituted for that of the applicant in the credit.

If the name of the applicant is specifically required by the credit to appear in any document other than the invoice, such requirement must be reflected in the transferred credit.

h. The first beneficiary has the right to substitute its own invoice and draft, if any, for those of a second beneficiary for an amount not in excess of that stipulated in the credit, and upon such substitution the first beneficiary can draw under the credit for the difference, if any, between its invoice and the invoice of a second beneficiary.

i. If the first beneficiary is to present its own invoice and draft, if any, but fails to do so on first demand, or if the invoices presented by the first beneficiary create discrepancies that did not exist in the presentation made by the second beneficiary and the first beneficiary fails to correct them on first demand, the transferring bank has the right to present the documents as received from the second beneficiary to the issuing bank, without further responsibility to the first beneficiary.

j. The first beneficiary may, in its request for transfer, indicate that honour or negotiation is to be effected to a second beneficiary at the place to which the credit has been transferred, up to and including the expiry date of the credit. This is without prejudice to the right of the first beneficiary in accordance with sub-article 38 (h).

k. Presentation of documents by or on behalf of a second beneficiary must be made to the transferring bank.


Article 39 Assignment of Proceeds

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 it may be or may become entitled under the credit, in accordance with the provisions of applicable law. This article relates only to the assignment of proceeds and not to the assignment of the right to perform under the credit.

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