UCP 600 Effective from 1st July 2007

An OVERVIEW

FEATURES
39 articles as against 49 of UCP 500 Certain articles of UCP 500 deleted in UCP 600 Simplified language.

Contents of certain UCP 500 articles have been merged/catered for in other ways.

article 1 - Application of UCP

UCP 600

Reference to new publication - effective date 1st July 2007. UCP 600 introduces:

NO capitalisation
This credit is subject to UCP 600 or This credit is subject to UCP 600 ICC 2007 Revision unless excluded/modified in the credit SWIFT: 40E Applicable rules UCP latest version

Continues to cover SBLC also.

UCP 600
article 2 - Definitions Concept of definitions - new to the UCP & avoids repetitive text. Some drawn from URR 525 / ISP 98. Complying presentation, It is not necessary to put words like in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice at each place Honour - The letter of credit (LC), when issued, should actually state how it is available i.e., by payment, acceptance or deferred payment and not to state by Honour.

UCP 600
article 2 Definitions (cont.) Negotiation means giving value. Nominated bank definition widens UCP 500 concept of freely negotiable credits. Under UCP 600, a credit could be available with any bank by payment, acceptance, deferred payment or negotiation, by use of the words a credit available with any bank. Hence, a nominated bank may or may not be a confirming bank

UCP 600
article 4 - Credits v. Contracts Banks Should not incorporate excessive goods descriptions, by attaching pro-forma invoices or contracts to LC or sending them to advising Bank after issuance by making it an integral part of LC (article 4.b.).

As such banks are forced to review line by line goods detail to determine compliance as a result - not in line with international standard banking practice.

UCP 600
article 5 - Documents v. Goods, Services or Performance

It is the sole discretion of banks that make a decision based on the documents and have no concern as to the goods, services or performance to which they may relate (UCP 500 wording In Credit operations all parties concerned deal with documents).

UCP 600
article 6 - Availability, Expiry Date and Place for Presentation A credit must specify a name of the bank with whom it is available or that it is available with any bank (freely available) Beneficiary has option to present documents to a nominated bank or issuing bank (new).

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

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UCP 600
article 7 - Issuing Bank Undertaking

The issuing bank must honour provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation. Issuing bank undertakes to make payment of sight bill which was available with nominated bank and a nominated bank and that nominated bank does not pay.
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UCP 600
article 8 - Confirming Bank Undertaking
If 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 honour, if the credit. Must negotiate, without recourse, if the credit is available by negotiation with the confirming bank. A confirming bank is irrevocably bound to honour or negotiate as of the time it adds its confirmation to the credit. 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. If a LC opening bank requests to confirm a credit to a particular bank & that bank is not prepared to do so, it must inform the issuing bank without delay and may advise the credit without confirmation. 10

UCP 600
Article 9 - Advising of Credits and Amendments

An AB which is not a confirming bank advises the credit and any amendment without any commitment on its part. AB undertakes that it has verified the apparent authenticity of the credit or amendment. An AB may utilize the services of another bank ("second advising bank") to advise the credit and any amendment (new concept) A bank utilizing the services of an AB or second advising bank to advise a credit must use the same bank to advise any amendment thereto If AB do not want to advise credit, it must inform, without delay, the bank from which the credit, amendment or advice has been received. If AB is not able to establish authenticity of credit it must inform, without delay, the bank from which the instructions have been received. If the AB decides not to advise the credit, 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. 11

UCP 600
article 10 Amendments
If beneficiary notifies acceptance or rejection prior to presentation date, it follows this route - from second advising bank to advising bank or from advising bank to issuing bank. Partial acceptance of an amendment is deemed to be notification of rejection.

Imposing time limits for acceptance/ rejection of amendments wording like unless beneficiary rejects this amendment within 7 days of this amendment date, it will be deemed to have been accepted would be disregarded.
article 10.f. time limit if any shall be disregarded.

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UCP 600
article 11 - Teletransmitted and Pre-Advised Credits and Amendments
No major changes simple language.

article 12 Nomination
Unless a nominated bank has confirmed the credit it has no obligation to honour or negotiate.

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UCP 600
article 13 - Bank-to-Bank Reimbursement Arrangements Credit must indicate the applicable bank-to-bank reimbursement rules (currently URR 525). There should be no expiry date in a reimbursement authorisation and any other condition to be followed by Reimbursing Bank.

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UCP 600
article 14 - Standard for Examination of Documents A nominated bank, confirming bank & the issuing bank must decide on the basis of the documents only, whether or not the documents appear on their face to constitute a complying presentation. Reference to reasonable time has been removed from UCP. Time limit for a bank to determine a complying presentation reduced from seven to five banking days following the day of receipt of the documents. An original transport document subject to UCP 600 articles 1925 must be presented not later than 21 days after the shipment date. article 14 (k) UCP 600 widens the scope beyond a transport document to any document with a shipper or consignor being different from beneficiary. 15

UCP 600
article 15 - Complying Presentation

When a bank ( nominated/confirming/ issuing) determines a presentation as complying it should honour or negotiate.
Banks having determined compliance, the process of honour or negotiation should commence.

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UCP 600
article 16 - Discrepant Documents, Waiver and Notice 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 last date of presentation. Advice of discrepancies must be given in a single notice of refusal within 5 banking days The refusal notice must state that the bank is holding the documents pending further instructions from the presenter; or that the issuing bank is holding the documents until it receives a waiver from the applicant and agrees to accept it, or 17 that the bank is returning the documents; or

UCP 600
article 17 - Original Documents and Copies
At least one original of each document stipulated in the credit must be presented and the remaining number in copies.

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UCP 600
article 18 - Commercial Invoice Must be issued by the beneficiary; Must be made out in the name of the applicant. Must be made out in the same currency as the credit; and Need not be signed. 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. The description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit.
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UCP 600
article 19 - Transport Document Covering at Least Two Different Modes of Transport

A transport document covering at least two different modes of transport is treated as a multimodal or combined transport document. 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. When an agent signs for or on behalf of the master there is no longer a need for the name of the master to be quoted (common for all transport articles). date of shipment - date of issuance of the transport document unless, the transport document indicates, by stamp or notation, a date of dispatch, taking in charge or shipped on board, then, this date (common for all transport articles).
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 Thanks!!

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UCP 600
article 20 - Bill of Lading No specific reference to a bill of lading covering a port-toport shipment date of shipment -The date of issuance of bill of lading unless it contains an on board notation indicating the date of shipment, in which case, the on board notation date is the date of shipment Covers intended port of loading or where the port of loading stated in the credit does not appear in the corresponding box on the bill of lading and is quoted as the place of receipt or similar There is a requirement for a suitable on board notation. Transhipment. article 21 - Non-Negotiable Sea Waybill
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UCP 600
article 22 - Charter Party Bill of Lading A new rule for UCP 600 is the signing of a charter party bill of lading by the charterer or a named agent on behalf of the charterer. Charter party bills of lading seldom show the name of a carrier, hence, reference to the same is omitted in UCP 600. Charter party bills of lading that it may indicate a discharge port within a range or geographical area of ports as stated in the credit. A bank will not examine Charter Party contracts even if they are required to be presented by the terms of the credit.

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UCP 600
article 23 - Air Transport Document The date of shipment will be considered to be the date of issuance 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. A major change in UCP 600 is now in line with the other transport documents. If there is a notation indicating a flight date, then this date will be considered as the date of shipment, even if such 24 notation was not required by the credit.

UCP 600
article 24 - Road, Rail or Inland Waterway Transport Documents

article 24 (a) (i) signature of carrier / agent

article 24 (a) (ii) If the Rail transport document does not identify the carrier. a rail transport document may be marked duplicate as opposed to original.

Determination of Date of shipment

Transhipment within the same mode of transport.

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UCP 600
article 25 - Courier Receipt, Post Receipt or Certificate of Posting UCP 600 rule covers the issuance of courier receipts where there is a shipment of goods involved. This rule does not cover situations where a courier receipt is required by the credit as evidence of having sent copy or original documents to the applicant or issuing bank. Date of shipment article 25.a.ii.
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UCP 600
article 26 - "On Deck", "Shipper's Load and Count", Said by Shipper to Contain and Charges Additional to Freight

Provides a definitive rule A transport document must not indicate that the goods are or will be loaded on deck as compared to the wording of UCP 500 sub-article 31 (i). 27

UCP 600
article 27 - Clean Transport Document
A transport document need not bear the word clean in order for it to be acceptable under a credit that requires the presentation of a clean transport document
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UCP 600
article 28 - Insurance Document and Coverage UCP 600 article 28 combines articles 34, 35 and 36 of UCP 500. UCP 600 brings in the concept of the signing of the insurance documents by a proxy. widened the scope of not allowing cover notes. Cover notes issued by any entity will not be allowed.

The amount of coverage (article 28.f.)

Risk coverage (article 28.h.)

Exclusion clause (article 28.i.)

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UCP 600
article 29 - Extension of Expiry Date or Last Day for Presentation No major change article 30 - Tolerance in Credit Amount, Quantity and Unit Prices Word circa removed due to the limited usage no major changes.

article 31 - Partial Drawings or Shipments

Multiple transport documents evidencing shipment on the same means of conveyance, for the same journey and same destination NOT be considered to be a partial 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 even though they depart from the same place, for the same destination, on the same date, IS a partial shipment.
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UCP 600
article 32 - Instalment Drawings or Shipments No Changes

article 33 - Hours of Presentation Banking hours are not defined in the rules but banking day is

article 34 - Disclaimer on Effectiveness of Documents

No major Changes
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UCP 600
article 35 - Disclaimer on Transmission and Translation Additional provisions - New paragraph (para 2 of article 35) Documents lost in transit. article 36 - Force Majeure acts of terrorism added as a force majeure event. article 37 - Disclaimer for Acts of an Instructed Party Emphasises that the issuing bank remains liable for payment of charges. UCP 600 seeks to stop issuing banks from inserting a clause that the advising of a credit or amendment to a beneficiary is conditional upon the receipt by the advising bank or second advising bank of its charges.
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UCP 600
article 38 - Transferable Credits under a transferable credit, no bank, including a confirming bank or an issuing bank, is under any obligation to transfer. Defines Transferable credit, Transferring bank and Transferred credit. An issuing bank may be a transferring bank.
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UCP 600
article 38 (cont.)

UCP 600 refers to the transferred credit accurately reflecting the terms and conditions of the credit i.e., including the confirmation.
Presentation to the transferring bank article 38 (k) documents of the second beneficiary must be routed through the transferring bank. Restricts the documents by-passing transferring bank and directly delivered to issuing bank denying substitution for first beneficiary.

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UCP 600
article 39 - Assignment of Proceeds There is no change to the position given in UCP 500 article 49.

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THANK YOU
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