Trade Finance

URR 725

2008-08-08T22:32:00.000-07:00

Article 1-Application of URR

The Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits ("rules"), ICC Publication No. 725, shall apply to any bank-to-bank reimbursement when the text of the reimbursement authorization expressly indicates that it is subject to these rules. They are binding on all parties thereto, unless expressly modified or excluded by the reimbursement authorization. The issuing bank is responsible for indicating in the documentary credit ("credit") that reimbursement is subject to these rules.
In a bank-to-bank reimbursement subject to these rules, the reimbursing bank acts on the instructions and under the authority of the issuing bank.
These rules are not intended to override or change the provisions of the Uniform Customs and Practice for Documentary Credits.

Article 2-Definitions

For the purpose of these rules, the following terms shall have the meaning specified in this article and may be used in the singular or plural as appropriate:
a. "Issuing bank" means the bank that has issued a credit and the reimbursement authorization under that credit.
b. "Reimbursing bank" means the bank instructed or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank.
c. "Reimbursement authorization" means an instruction or authorization, independent of the credit, issued by an issuing bank to a reimbursing bank to reimburse a claiming bank or, if so requested by the issuing bank, to accept and pay a time draft drawn on the reimbursing bank.
d. "Reimbursement amendment" means an advice from the issuing bank to a reimbursing bank stating changes to a reimbursement authorization.
e. "Claiming bank" means a bank that honours or negotiates a credit and presents a reimbursement claim to the reimbursing bank. "Claiming bank" includes a bank authorized to present a reimbursement claim to the reimbursing bank on behalf of the bank that honours or negotiates.
f. "Reimbursement claim" means a request for reimbursement from the claiming bank to the reimbursing bank.
g. "Reimbursement undertaking" means a separate irrevocable undertaking of the reimbursing bank, issued upon the authorization or request of the issuing bank, to the claiming bank named in the reimbursement authorization, to honour that bank's reimbursement claim, provided the terms and conditions of the reimbursement undertaking have been complied with.
h. "Reimbursement undertaking amendment" means an advice from the reimbursing bank to the claiming bank named in the reimbursement authorization stating changes to a reimbursement undertaking.
i. For the purpose of these rules, branches of a bank in different countries are considered to be separate banks.

Article 3-Reimbursement Authorizations Versus Credits

A reimbursement authorization is separate from the credit to which it refers, and a reimbursing bank is not concerned with or bound by the terms and conditions of the credit, even if any reference whatsoever to it is included in the reimbursement authorization.

Article 4-Honour of a Reimbursement Claim

Except as provided by the terms of its reimbursement undertaking, a reimbursing bank is not obligated to honour a reimbursement claim.

Article 5-Responsibility of the Issuing Bank

The issuing bank is responsible for providing the information required in these rules in both the reimbursement authorization and the credit, and is responsible for any consequences resulting from non-compliance with this provision.

Article 6-Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment

a. All reimbursement authorizations and reimbursement amendments must be issued in the form of an authenticated teletransmission or a signed letter.
When a credit or amendment thereto which has an effect on the reimbursement authorization is issued by teletransmission, the issuing bank should advise its reimbursement authorization or reimbursement amendment to the reimbursing bank by authenticated teletransmission. The teletransmission will be deemed the operative reimbursement authorization or reimbursement amendment, and any subsequent mail confirmation shall be disregarded.
b. An issuing bank must not send to a reimbursing bank:
i. a copy of the credit or any part thereof, or a copy of an amendment to the credit in place of or in addition to the reimbursement authorization or reimbursement amendment. If such copies are received by the reimbursing bank, they shall be disregarded.
ii. multiple reimbursement authorizations under one teletransmission or letter, unless expressly agreed to by the reimbursing bank.
c. An issuing bank shall not require a certificate of compliance with the terms and conditions of the credit in the reimbursement authorization.
d. A reimbursement authorization must (in addition to the requirement of article 1 for incorporation of reference to these rules) state the following:
i. credit number;
ii. currency and amount;
iii. additional amounts payable and tolerance, if any;
iv. claiming bank or, in the case of a freely available credit, that claims can be made by any bank. In the absence of any such indication, the reimbursing bank is authorized to pay any claiming bank;
v. parties responsible for charges (claiming bank's and reimbursing bank's charges) in accordance with article 16 of these rules.
A reimbursement amendment must state only the relative changes to the above and the credit number.
e. If the reimbursing bank is requested to accept and pay a time draft, the reimbursement authorization must indicate the following, in addition to the information specified in (d) above:
i. tenor of draft to be drawn;
ii. drawer;
iii. party responsible for acceptance and discount charges, if any.
A reimbursement amendment must state the relative changes to the above.
An issuing bank should not require a sight draft to be drawn on the reimbursing bank.
f. Any requirement for:
i. pre-notification of a reimbursement claim to the issuing bank must be included in the credit and not in the reimbursement authorization.
ii. pre-debit notification to the issuing bank must be indicated in the credit.
g. If the reimbursing bank is not prepared to act for any reason whatsoever under the reimbursement authorization or reimbursement amendment, it must so inform the issuing bank without delay.
h. In addition to the provisions of articles 3 and 4, the reimbursing bank is not responsible for the consequences resulting from non-reimbursement or delay in reimbursement of reimbursement claims when any provision contained in this article is not followed by the issuing bank or claiming bank.

Article 7-Expiry of a Reimbursement Authorization

Except to the extent expressly agreed to by the reimbursing bank, the reimbursement authorization should not be subject to an expiry date or latest date for presentation of a claim, except as indicated in article 9.
A reimbursing bank will assume no responsibility for the expiry date of a credit and, if such date is provided in the reimbursement authorization, it will be disregarded.
The issuing bank must cancel its reimbursement authorization for any unutilized portion of the credit to which it refers, informing the reimbursing bank without delay.

Article 8-Amendment or Cancellation of a Reimbursement Authorization

Except where the issuing bank has authorized or requested the reimbursing bank to issue a reimbursement undertaking as provided in article 9, and the reimbursing bank has issued a reimbursement undertaking:
a. the issuing bank may issue a reimbursement amendment or cancel a reimbursement authorization at any time upon sending notice to that effect to the reimbursing bank.
b. the issuing bank must send notice of any amendment to a reimbursement authorization that has an effect on the reimbursement instructions contained in the credit to the nominated bank or, in the case of a freely available credit, the advising bank. In case of cancellation of the reimbursement authorization prior to expiry of the credit, the issuing bank must provide the nominated bank or the advising bank with new reimbursement instructions.
c. the issuing bank must reimburse the reimbursing bank for any reimbursement claims honoured or draft accepted by the reimbursing bank prior to the receipt by it of a notice of cancellation or reimbursement amendment.

Article 9-Reimbursement Undertaking

a. In addition to the requirements of sub-articles 6 (a), (b) and (c) of these rules, a reimbursement authorization authorizing or requesting the issuance of a reimbursement undertaking must comply with the provisions of this article.
b. An authorization or request by the issuing bank to the reimbursing bank to issue a reimbursement undertaking is irrevocable ("irrevocable reimbursement authorization") and must (in addition to the requirement of article 1 for incorporation of reference to these rules) contain the following:
i. credit number;
ii. currency and amount;
iii. additional amounts payable and tolerance, if any;
iv. full name and address of the claiming bank to which the reimbursement undertaking should be issued;
v. latest date for presentation of a claim, including any usance period;
vi. parties responsible for charges (claiming bank's and reimbursing bank's charges and reimbursement undertaking fee) in accordance with article 16 of these rules.
c. If the reimbursing bank is requested to accept and pay a time draft, the irrevocable reimbursement authorization must also indicate the following, in addition to the information contained in (b) above:
i. tenor of draft to be drawn;
ii. drawer;
iii. drawee of draft, if other than the reimbursing bank;
iv. party responsible for acceptance and discount charges, if any.
An issuing bank should not require a sight draft to be drawn on the reimbursing bank.
d. If the reimbursing bank is authorized or requested by the issuing bank to issue its reimbursement undertaking to the claiming bank but is not prepared to do so, it must so inform the issuing bank without delay.
e. A reimbursement undertaking must indicate the terms and conditions of the undertaking and:
i. the credit number and name of the issuing bank;
ii. the currency and amount of the reimbursement authorization;
iii. additional amounts payable and tolerance, if any;
iv. the currency and amount of the reimbursement undertaking;
v. the latest date for presentation of a claim, including any usance period;
vi. the party to pay the reimbursement undertaking fee, if other than the issuing bank. The reimbursing bank must also include its charges, if any, that will be deducted from the amount claimed.
f. If the latest date for presentation of a claim falls on a day when the reimbursing bank is closed for reasons other than those referred to in article 15, the latest date for presentation of a claim will be extended to the first following banking day.
g. A reimbursing bank is irrevocably bound to honour a reimbursement claim as of the time it issues the reimbursement undertaking.
h. i. An irrevocable reimbursement authorization cannot be amended or cancelled without the agreement of the reimbursing bank.
ii. When an issuing bank has amended its irrevocable reimbursement authorization, a reimbursing bank that has issued its reimbursement undertaking may amend its undertaking to reflect such amendment. If a reimbursing bank chooses not to issue its reimbursement undertaking amendment, it must so inform the issuing bank without delay.
iii. An issuing bank that has issued its irrevocable reimbursement authorization amendment shall be irrevocably bound as of the time of its advice of the irrevocable reimbursement authorization amendment.
iv. The terms of the original irrevocable reimbursement authorization (or an authorization incorporating previously accepted irrevocable reimbursement authorization amendments) will remain in force for the reimbursing bank until it communicates its acceptance of the amendment to the issuing bank.
v. A reimbursing bank must communicate its acceptance or rejection of an irrevocable reimbursement authorization amendment to the issuing bank. A reimbursing bank is not required to accept or reject an irrevocable reimbursement authorization amendment until it has received acceptance or rejection from the claiming bank of its reimbursement undertaking amendment.
i. i. A reimbursement undertaking cannot be amended or cancelled without the agreement of the claiming bank.
ii. A reimbursing bank is irrevocably bound as of the time it issues the reimbursement undertaking amendment.
iii. The terms of the original reimbursement undertaking (or a reimbursement undertaking incorporating previously accepted reimbursement amendments) will remain in force for the claiming bank until it communicates its acceptance of the reimbursement undertaking amendment to the reimbursing bank.
iv. A claiming bank must communicate its acceptance or rejection of a reimbursement undertaking amendment to the reimbursing bank.

Article 10-Standards for a Reimbursement Claim

a. The claiming bank's claim for reimbursement:
i. must be in the form of a teletransmission, unless specifically prohibited by the reimbursement authorization or an original letter. A reimbursing bank has the right to request that a reimbursement claim be authenticated and, in such case, the reimbursing bank shall not be liable for any consequences resulting from any delay incurred. If a reimbursement claim is made by teletransmission, no mail confirmation is to be sent. In the event such a mail confirmation is sent, the claiming bank will be responsible for any consequences that may arise from a duplicate reimbursement;
ii. must clearly indicate the credit number and the issuing bank (and reimbursing bank's reference number, if known);
iii. must separately stipulate the principal amount claimed, any additional amount due and charges;
iv. must not be a copy of the claiming bank's advice of payment, deferred payment, acceptance or negotiation to the issuing bank;
v. must not include multiple reimbursement claims under one teletransmission or letter;
vi. must, in the case of a reimbursement undertaking, comply with the terms and conditions of the reimbursement undertaking.
b. When a time draft is to be drawn on the reimbursing bank, the claiming bank must forward the draft with the reimbursement claim to the reimbursing bank for processing and include, where appropriate, the following in its claim:
i. general description of the goods, services or performance;
ii. country of origin;
iii. place of destination or performance.
and if the transaction covers the shipment of merchandise:
iv. date of shipment;
v. place of shipment.
c. A reimbursing bank assumes no liability or responsibility for any consequences that may arise out of any non-acceptance or delay of processing should the claiming bank fail to follow the provisions of this article.

Article 11-Processing a Reimbursement Claim

a. i. A reimbursing bank shall have a maximum of three banking days following the day of receipt of the reimbursement claim to process the claim. A reimbursement claim received outside banking hours will be deemed to be received on the next following banking day.
If a pre-debit notification is required by the issuing bank, this pre-debit notification period shall be in addition to the processing period mentioned above.
ii. If the reimbursing bank determines not to reimburse, either because of a non-conforming claim under a reimbursement undertaking or for any reason whatsoever under a reimbursement authorization, it shall give notice to that effect by telecommunication or, if that is not possible, by other expeditious means, no later than the close of the third banking day following the day of receipt of the claim (plus any additional period mentioned in sub-article (i) above). Such notice shall be sent to the claiming bank and the issuing bank and, in the case of a reimbursement undertaking, it must state the reasons for non-payment of the claim.
b. A reimbursing bank will not process a request for back value (value dating prior to the date of a reimbursement claim) from the claiming bank.
c. When a reimbursing bank has not issued a reimbursement undertaking and a reimbursement is due on a future date:
i. the reimbursement claim must specify the predetermined reimbursement date;
ii. the reimbursement claim should not be presented to the reimbursing bank more than ten banking days prior to such predetermined date. If a reimbursement claim is presented more than ten banking days prior to the predetermined date, the reimbursing bank may disregard the reimbursement claim. If the reimbursing bank disregards the reimbursement claim, it must so inform the claiming bank by teletransmission or other expeditious means without delay.
iii. If the predetermined reimbursement date is more than three banking days following the day of receipt of the reimbursement claim, the reimbursing bank has no obligation to provide notice of non-reimbursement until such predetermined date, or no later than the close of the third banking day following the receipt of the reimbursement claim plus any additional period mentioned in (a) (i) above, whichever is later.
d. Unless otherwise expressly agreed to by the reimbursing bank and the claiming bank, a reimbursing bank will effect reimbursement under a reimbursement claim only to the claiming bank.
e. A reimbursing bank assumes no liability or responsibility if it honours a reimbursement claim indicating that a payment, acceptance or negotiation was made under reserve or against an indemnity, and shall disregard such indication.

Article 12-Duplication of a Reimbursement Authorization

An issuing bank must not, upon receipt of documents, give a new reimbursement authorization or additional instructions unless they constitute an amendment to, or a cancellation of, an existing reimbursement authorization. If the issuing bank does not comply with the above and a duplicate reimbursement is made, it is the responsibility of the issuing bank to obtain the return of the amount of the duplicate reimbursement. The reimbursing bank assumes no liability or responsibility for any consequences that may arise from any such duplication.

Article 13-Foreign Laws and Usages

The issuing bank shall be bound by and liable to indemnify the reimbursing bank against all obligations and responsibilities imposed by foreign laws and usages.

Article 14-Disclaimer on the Transmission of Messages

A reimbursing 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, delivery of letters or documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the credit, reimbursement authorization or reimbursement claim, 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, reimbursement authorization or reimbursement claim. A reimbursing bank assumes no liability or responsibility for errors in translation or interpretation of technical terms.

Article 15-Force Majeure

A reimbursing 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.

Article 16-Charges

a. A reimbursing bank's charges are for the account of the issuing bank.
b. When honouring a reimbursement claim, a reimbursing bank is obligated to follow the instructions regarding any charges contained in the reimbursement authorization.
c. If a reimbursement authorization states that the 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. When a reimbursing bank follows the instructions of the issuing bank regarding charges (including commissions, fees, costs or expenses) and these charges are not paid, or a reimbursement claim is never presented to the reimbursing bank under the reimbursement authorization, the issuing bank remains liable for such charges.
d. All charges paid by the reimbursing bank will be in addition to the amount of the authorization, provided that the claiming bank indicates the amount of such charges.
e. If the issuing bank fails to provide the reimbursing bank with instructions regarding charges, all charges shall be for the account of the issuing bank.

Article 17-Interest Claims/Loss of Value

Any claim for loss of interest, loss of value due to any exchange rate fluctuations, revaluations or devaluations are between the claiming bank and the issuing bank, unless such losses result from the non-performance of the reimbursing bank under a reimbursement undertaking.

ISBP 600

2008-08-08T22:06:00.000-07:00

The Application and Issuance of the Credit

1. The terms of a credit are independent of the underlying transaction even if a credit expressly refers to that transaction. To avoid unnecessary costs, delays and disputes in the examination of documents, however, the applicant and beneficiary should carefully consider which documents should be required, by whom they should be produced and the time frame for presentation.
2. The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. Unless expressly stated otherwise, a request to issue or amend a credit authorizes an issuing bank to supplement or develop the terms in a manner necessary or desirable to permit the use of the credit.
3. The applicant should be aware that UCP 600 contains articles such as 3, 14, 19, 20, 21, 23, 24, 28(i), 30 and 31 that define terms in a manner that may produce unexpected results unless the applicant fully acquaints itself with these provisions. For example, a credit requiring presentation of a bill of lading and containing a prohibition against transhipment will, in most cases, have to exclude UCP 600 sub-article 20(c) to make the prohibition against transhipment effective.
4. A credit should not require presentation of documents that are to be issued or countersigned by the applicant. If a credit is issued including such terms, the beneficiary must either seek amendment or comply with them and bear the risk of failure to do so.
5. Many of the problems that arise at the examination stage could be avoided or resolved by careful attention to detail in the underlying transaction, the credit application and issuance of the credit as discussed.
6. The use of generally accepted abbreviations, for example "Ltd" instead of "Limited", "Int'l" instead of "International", "Co." instead of "Company", "kgs" or "kos" instead of "kilos", "Ind" instead of "Industry", "mfr" instead of "manufacturer" or "mt" instead of "metric tons" - or vice versa - does not make a doument discrepant.
7. Virgules (slash marks "/") may have different meanings and, unless apparent in the context used, should not be used as a substitute for a word.

Certifications and Declarations

8. A certification, declaration or the like may either be a separate document or contained within another document as required by the credit. If the certification or declaration appears in another document which is signed and dated, any certification or declaration appearing on that document does not require a separate signature or date if the certification or declaration appears to have been given by the same entity that issued and signed the document.

Corrections and Alterations

9. Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so. Corrections and alterations in documents which have been legalized, visaed, certified or similar, must appear to be authenticated by the party who legalized, visaed, certified etc., the document. The authentication must show by whom the authentication has been made and include the signature or initials of that party. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration.
10. Corrections and alterations in documents issued by the beneficiary itself, except drafts, which have not been legalized, visaed, certified or similar, need not be authenticated. See also "Drafts and Calculation of Maturity Date".
11. The use of multiple type styles or font sizes or handwriting in the same document does not, by itself, signify a correction or alteration.
12. Where a document contains more than one correction or alteration, either each correction must be authenticated separately or one authentication must be linked to all corrections in an appropriate way. For example, if the document shows three corrections numbered 1, 2 and 3, one statement, such as "Correction numbers 1, 2 and 3 above authorized by XXX" or similar, will satisfy the requirement for authentication.

Dates

13. Drafts, transport documents and insurance documents must be dated even if a credit does not expressly so require. A requirement that a document, other than those mentioned above, be dated may be satisfied by reference in the document to the date of another document forming part of the same presentation (e.g., where a shipping certificate is issued which states "date as per bill of lading number xxx" or similar terms). Although it is expected that a required certificate or declaration in a separate document be dated, its compliance will depend on the type of certification or declaration that has been requested, its required wording and the wording that appears within it. Whether other documents require dating will depend on the nature and content of the document in question.
14. Any document, including a certificate of analysis, inspection certificate and pre-shipment inspection certificate, may be dated after the date of shipment. However, if a credit requires a document evidencing a pre-shipment event (e.g., pre-shipment inspection certificate), the document must, either by its title or content, indicate that the event (e.g., inspection) took place prior to or on the date of shipment. A requirement for an "inspection certificate" does not constitute a requirement to evidence a pre-shipment event. Documents must not indicate that they were issued after the date they are presented.
15. A document indicating a date of preparation and a later date of signing is deemed to be issued on the date of signing.
16. Phrases often used to signify time on either side of a date or event:
a. "within 2 days after" indicates a period from the date of the event until 2 days after the event.
b. "not later than 2 days after" does not indicate a period, only a latest date. If an advice must not be dated prior to a specific date, the credit must so state.
c. "at least 2 days before" indicates that something must take place not later than 2 days before an event. There is no limit as to how early it may take place.
d. "within 2 days of" indicates a period 2 days prior to the event until 2 days after the event.
17. The term "within" when used in connection with a date excludes that date in the calculation of the period.
18. Dates may be expressed in different formats, e.g., the 12th of November 2007 could be expressed as 12 Nov 07, 12Nov07, 12.11.2007, 12.11.07, 2007.11.12, 11.12.07, 121107, etc. Provided that the date intended can be determined from the document or from other documents included in the presentation, any of these formats are acceptable. To avoid confusion it is recommended that the name of the month should be used instead of the number.

Documents for which the UCP 600 Transport Articles Do Not Apply

19. Some documents commonly used in relation to the transportation of goods, e.g., Delivery Order, Forwarder's Certificate of Receipt, Forwarder's Certificate of Shipment, Forwarder's Certificate of Transport, Forwarder's Cargo Receipt and Mate's Receipt, do not reflect a contract of carriage and are not transport documents as defined in UCP 600 articles 19-25. As such, UCP 600 sub-article 14(c) would not apply to these documents. Therefore, these documents will be examined in the same manner as other documents for which there are no specific provisions in UCP 600, i.e., under sub-article 14(f). In any event, documents must be presented not later than the expiry date for presentation as stated in the credit.
20. Copies of transport documents are not transport documents for the purpose of UCP 600 articles 19-25 and sub-article 14(c). The UCP 600 transport articles apply where there are original transport documents presented. Where a credit allows for the presentation of a copy transport document rather than an original, the credit must explicitly state the details to be shown. Where copies (non-negotiable) are presented, they need not evidence signature, dates, etc.

Expressions Not Defined in UCP 600

21. Expressions such as "shipping documents", "stale documents acceptable", "third party documents acceptable" and "exporting country" should not be used as they are not defined in UCP 600. If used in a credit, their meaning should be made apparent. If not, they have the following meaning under international standard banking practice:
a. "shipping documents" - all documents (not only transport documents), except drafts, required by the credit.
b. "stale documents acceptable" - documents presented later than 21 calendar days after the date of shipment are acceptable as long as they are presented no later than the expiry date for presentation as stated in the credit.
c. "third party documents acceptable" - all documents, excluding drafts but including invoices, may be issued by a party other than the beneficiary. If it is the intention of the issuing bank that the transport or other documents may show a shipper other than the beneficiary, the clause is not necessary because it is already permitted by sub-article 14(k).
d. "exporting country" - the country where the beneficiary is domiciled, or the country of origin of the goods, or the country of receipt by the carrier or the country from which shipment or dispatch is made.

Issuer of Documents

22. If a credit indicates that a document is to be issued by a named person or entity, this condition is satisfied if the document appears to be issued by the named person or entity. It may appear to be issued by a named person or entity by use of its letterhead, or if there is no letterhead, the document appears to have been completed or signed by, or on behalf of the named person or entity.

Language

23. Under international standard banking practice, it is expected that documents issued by the beneficiary will be in the language of the credit. When a credit states that documents in two or more languages are acceptable, a nominated bank may, in its advice of the credit, limit the number of acceptable languages as a condition of its engagement in the credit.

Mathematical Calculations

24. Detailed mathematical calculations in documents will not be checked by banks. Banks are only obliged to check total values against the credit and other required documents.

Misspellings or Typing Errors

25. A misspelling or typing error that does not affect the meaning of a word or the sentence in which it occurs does not make a document discrepant. For example, a description of the merchandise as "mashine" instead of "machine", "fountan pen" instead of pen" or "modle" instead of "model" would not make the document discrepant. However, a description as "model 123" instead of "model 321" would not be regarded as a typing error and would constitute a discrepancy.

Multiple Pages and Attachments or Riders

26. Unless the credit or a document provides otherwise, pages which are physically bound together, sequentially numbered or contain internal cross references, however named or entitled, are to be examined as one document, even if some of the pages are regarded as an attachment. Where a document consists of more than one page, it must be possible to determine that the pages are part of the same document.
27. If a signature or endorsement is required to be on a document consisting of more than one page, the signature is normally placed on the first or last page of the document, but unless the credit or the document itself indicates where a signature or endorsement is to appear, the signature or endorsement may appear anywhere on the document.

Originals and Copies

28. Documents issued in more than one original may be marked "Original", "Duplicate", "Triplicate", "First Original", "Second Original", etc. None of these markings will disqualify a document as an original.
29. The number of originals to be presented must be at least the number required by the credit, the UCP 600 or, where the document itself states how many originals have been issued, the number stated on the document.
30. It can sometimes be difficult to determine from the wording of a credit whether it requires an original or a copy, and to determine whether that requirement is satisfied by an original or a copy.
For example, where the credit requires:
a. "Invoice", "One Invoice" or "Invoice in 1 copy", it will be understood to be a requirement for an original invoice.
b. "Invoice in 4 copies", it will be satisfied by the presentation of at least one original and the remaining number as copies of an invoice.
c. "One copy of Invoice", it will be satisfied by presentation of either a copy or an original of an invoice.
31. Where an original would not be accepted in lieu of a copy, the credit must prohibit an original, e.g., "photocopy of invoice - original document not acceptable in lieu of photocopy", or the like. Where a credit calls for a copy of a transport document and indicates the disposal instructions for the original of that transport document, an original transport document will not be acceptable.
32. Copies of documents need not be signed.
33. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled "The Determination of an 'Original' Document in the Context of UCP 500 sub-Article 20(b)" is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes.

Shipping Marks

34. The purpose of a shipping mark is to enable identification of a box, bag or package. If a credit specifies the details of a shipping mark, the documents mentioning the marks must show these details, but additional information is acceptable provided it is not in conflict with the credit terms.
35. Shipping marks contained in some documents often include information in excess of what would normally be considered "shipping marks" and could include information such as the type of goods, warnings as to the handling of fragile goods, net and/or gross weight of the goods, etc. The fact that some documents show such additional information while others do not is not a discrepancy.
36. Transport documents covering containerized goods will sometimes only show a container number under the heading "Shipping marks". Other documents that show a detailed marking will not be considered to be in conflict for that reason.

Signatures

37. Even if not stated in the credit, drafts, certificates and declarations by their nature require a signature. Transport documents and insurance documents must be signed in accordance with the provisions of UCP 600.
38. The fact that a document has a box or space for a signature does not necessarily mean that such box or space must be completed with a signature. For example, banks do not require a signature in the area titled "Signature of shipper or their agent" or similar phrases commonly found on transport documents, such as air waybills or road transport documents. If the content of a document indicates that it requires a signature to establish its validity (e.g., "This document is not valid unless signed" or similar terms), it must be signed.
39. A signature need not be handwritten. Facsimile signatures, perforated signatures, stamps, symbols (such as chops) or any electronic or mechanical means of authentication are sufficient. However, a photocopy of a signed document does not qualify as a signed original document, nor does a signed document transmitted through a fax machine, absent an original signature. A requirement for a document to be "signed and stamped", or a similar requirement, is also fulfilled by a signature and the name of the party typed, or stamped, or handwritten, etc.
40. A signature on a company letterhead paper will be taken to be the signature of that company, unless otherwise stated. The company name need not be repeated next to the signature.

Title of Documents and Combined Documents

41. Documents may be titled as called for in the credit, bear a similar title or be untitled. For example, a credit requirement for a "Packing List" may also be satisfied by a document containing packing details whether titled "Packing Note", "Packing and Weight List", etc., or an untitled document. The content of a document must appear to fulfil the function of the required document.
42. Documents listed in a credit should be presented as separate documents. If a credit requires a packing list and a weight list, such requirement will be satisfied by presentation of two separate documents, or by presentation of two original copies of a combined packing and weight list, provided such document states both packing and weight details.

Tenor

43. The tenor must be in accordance with the terms of the credit.
a. If a draft is drawn at a tenor other than sight, or other than a certain period after sight, it must be possible to establish the maturity date from the data in the draft itself.
b. As an example of where it is possible to establish a maturity date from the data in the draft, if a credit calls for drafts at a tenor 60 days after the bill of lading date, where the date of the bill of lading is 12 July 2007, the tenor could be indicated on the draft in one of the following ways:
i. "60 days after bill of lading date 12 July 2007", or
ii. "60 days after 12 July 2007", or
iii. "60 days after bill of lading date" and elsewhere on the face of the draft state "bill of lading date 12 July 2007", or
iv. "60 days date" on a draft dated the same day as the date of the bill of lading, or
v. "10 September 2007", i.e., 60 days after the bill of lading date.
c. If the tenor refers to xxx days after the bill of lading date, the on board date is deemed to be the bill of lading date even if the on board date is prior to or later than the date of issuance of the bill of lading.
d. UCP 600 article 3 provides guidance that where the words "from" and "after" are used to determine maturity dates, the calculation of the maturity commences the day following the date of the document, shipment or other event, i.e., 10 days after or from March 1 is March 11.
e. If a bill of lading showing more than one on board notation is presented under a credit which requires drafts to be drawn, for example, at 60 days after or from bill of lading date, and the goods according to both or all on board notations were shipped from ports within a permitted geographical area or region, the earliest of these on board dates will be used for calculation of the maturity date. Example: the credit requires shipment from European port, and the bill of lading evidences on board vessel "A" from Dublin August 16 and on board vessel "B" from Rotterdam August 18. The draft should reflect 60 days from the earliest on board date in a European port, i.e., August 16.
f. If a credit requires drafts to be drawn, for example, at 60 days after or from bill of lading date, and more than one set of bills of lading is presented under one draft, the date of the last bill of lading will be used for the calculation of the maturity date.
44. While the examples refer to bill of lading dates, the same principles apply to all transport documents.

Maturity Date

45. If a draft states a maturity date by using an actual date, the date must have been calculated in accordance with the requirements of the credit.
46. For drafts drawn "at XXX days sight", the maturity date is established as follows:
a. in the case of complying documents, or in the case of non-complying documents where the drawee bank has not provided a notice of refusal, the maturity date will be XXX days after the date of receipt of documents by the drawee bank.
b. in the case of non-complying documents where the drawee bank has provided a notice of refusal and subsequent approval, at the latest XXX days after the date of acceptance of the draft by the drawee bank. The date of acceptance of the draft must be no later than the date the issuing bank accepts the waiver of the applicant.
47. In all cases the drawee bank must advise the maturity date to the presenter. The calculation of tenor and maturity dates, as shown above, would also apply to credits designated as being available by deferred payment, i.e., where there is no requirement for a draft to be presented by the beneficiary.

Banking Days, Grace Days, Delays in Remittance

48. Payment must be available in immediately available funds on the due date at the place where the draft or documents are payable, provided such due date is a banking day in that place. If the due date is a non-banking day, payment will be due on the first banking day following the due date. Delays in the remittance of funds, such as grace days, the time it takes to remit funds, etc., must not be in addition to the stated or agreed due date as defined by the draft or documents.

Endorsement

49. The draft must be endorsed, if necessary.

Amounts

50. The amount in words must accurately reflect the amount in figures if both are shown, and indicate the currency, as stated in the credit.
51. The amount must agree with that of the invoice, unless as a result of UCP 600 sub-article 18(b).

How the Draft is Drawn

52. The draft must be drawn on the party stated in the credit.
53. The draft must be drawn by the beneficiary.

Drafts on the Applicant

54. A credit may be issued requiring a draft drawn on the applicant as one of the required documents, but must not be issued available by drafts drawn on the applicant.

Corrections and Alterations

55. Corrections and alterations on a draft, if any, must appear to have been authenticated by the drawer.
56. In some countries a draft showing corrections or alterations will not be acceptable even with the drawer's authentication. Issuing banks in such countries should make a statement in the credit to the effect that no correction or alteration must appear in the draft.

Definition of Invoice

57. A credit requiring an "invoice" without further definition will be satisfied by any type of invoice presented (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc.). However, invoices identified as "provisional", "pro-forma" or the like are not acceptable. When a credit requires presentation of a commercial invoice, a document titled "invoice" will be acceptable.

Description of the Goods, Services or Performance and other General Issues Related to Invoices

58. The description of the goods, services or performance in the invoice must correspond with the description in the credit. There is no requirement for a mirror image. For example, details of the goods may be stated in a number of areas within the invoice which, when collated together, represent a description of the goods corresponding to that in the credit.
59. The description of goods, services or performance in an invoice must reflect what has actually been shipped or provided. For example, where there are two types of goods shown in the credit, such as 10 trucks and 5 tractors, an invoice that reflects only shipment of 4 trucks would be acceptable provided the credit does not prohibit partial shipment. An invoice showing the entire goods description as stated in the credit, then stating what has actually been shipped, is also acceptable.
60. An invoice must evidence the value of the goods shipped or services or performance provided. Unit price(s), if any, and currency shown in the invoice must agree with that shown in the credit. The invoice must show any discounts or deductions required in the credit. The invoice may also show a deduction covering advance payment, discount, etc., not stated in the credit.
61. If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g., a credit term "CIF Singapore Incoterms 2000" would not be satisfied by "CIF Singapore Incoterms"). Charges and costs must be included within the value shown against the stated trade term in the credit and invoice. Any charges and costs shown beyond this value are not allowed.
62. Unless required by the credit, an invoice need not be signed or dated.
63. The quantity of merchandise, weights and measurements shown on the invoice must not conflict with the same quantities appearing on other documents.
64. An invoice must not show:
a. over-shipment (except as provided in UCP 600 sub-article 30(b)), or
b. merchandise not called for in the credit (including samples, advertising materials, etc.) even if stated to be free of charge.
65. The quantity of the goods required in the credit may vary within a tolerance of +/- 5%. This does not apply if a credit states that the quantity must not be exceeded or reduced, or if a credit states the quantity in terms of a stipulated number of packing units or individual items. A variance of up to +5% in the goods quantity does not allow the amount of the drawing to exceed the amount of the credit.
66. Even when partial shipments are prohibited, a tolerance of 5% less in the credit amount is acceptable, provided that the quantity is shipped in full and that any unit price, if stated in the credit, has not been reduced. If no quantity is stated in the credit, the invoice will be considered to cover the full quantity.
67. If a credit calls for instalment shipments, each shipment must be in accordance with the instalment schedule.

Application of UCP 600 Article 19

68. If a credit requires presentation of a transport document covering transportation utilizing at least two modes of transport (multimodal or combined transport document), and if the transport document clearly shows that it covers a shipment from the place of taking in charge or port, airport or place of loading to the place of final destination mentioned in the credit, UCP 600 article 19 is applicable. In such circumstances, the transport document must not indicate that shipment or dispatch has been effected by only one mode of transport, but it may be silent regarding the modes of transport utilized.
69. In all places where the term "multimodal transport document" is used within this document, it also includes the term "combined transport document". A document need not be titled "multimodal transport document" or "combined transport document" to be acceptable under UCP 600 article 19, even if such expressions are used in the credit.

Full Set of Originals

70. A UCP 600 article 19 transport document must indicate the number of originals that have been issued. Transport documents marked "First Original", "Second Original", "Third Original", "Original", "Duplicate", "Triplicate", etc., or similar expressions are all originals. Multimodal transport documents need not be marked "original" to be acceptable under a credit. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled "The Determination of an 'Original' Document in the Context of UCP 500 sub-Article 20(b)" is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes.

Signing of Multimodal Transport Documents

71. Original multimodal transport documents must be signed in the form described in UCP 600 sub-article 19(a)(i) and indicate the name of the carrier, identified as the carrier.
a. If an agent signs a multimodal transport document on behalf of the carrier, the agent must be identified as agent and must identify on whose behalf it is signing, unless the carrier has been identified elsewhere on the multimodal transport document.
b. If the master (captain) signs the multimodal transport document, the signature of the master (captain) must be identified as "master" ("captain"). In this event, the name of the master (captain) need not be stated.
c. If an agent signs the multimodal transport document on behalf of the master (captain), the agent must be identified as agent. In this event, the name of the master (captain) need not be stated.
72. If a credit states "Freight Forwarder's Multimodal transport document is acceptable" or uses a similar phrase, then the multimodal transport document may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as carrier or agent for the named carrier. In this event, it is not necessary to show the name of the carrier.

On Board Notations

73. The issuance date of a multimodal transport document will be deemed to be the date of dispatch, taking in charge or shipped on board unless it bears a separate dated notation evidencing dispatch, taking in charge or shipped on board from the location required by the credit, in which event the date of the notation will be deemed to be the date of shipment whether or not the date is before or after the issuance date of the document.
74. "Shipped in apparent good order", "Laden on board", "clean on board" or other phrases incorporating words such as "shipped" or "on board" have the same effect as "Shipped on board".

Place of Taking in Charge, Dispatch, Loading on Board and Destination

75. If a credit gives a geographical range for the place of taking in charge, dispatch, loading on board and destination (e.g., "Any European Port"), the multimodal transport document must indicate the actual place of taking in charge, dispatch, shipped on board and destination, which must be within the geographical area or range stated in the credit.

Consignee, Order Party, Shipper and Endorsement, Notify Party

76. If a credit requires a multimodal transport document to show that the goods are consigned to a named party, e.g., "consigned to Bank X" (a "straight" consignment), rather than "to order" or "to order of Bank X", the multimodal transport document must not contain words such as "to order" or "to order of" that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned "to order" or "to order of" a named party, the multimodal transport document must not show that the goods are consigned straight to the named party.
77. If a multimodal transport document is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
78. If a credit does not stipulate a notify party, the respective field on the multimodal transport document may be left blank or completed in any manner.

Transhipment and Partial Shipment

79. In a multimodal transport, transhipment will occur, i.e., 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.
80. If a credit prohibits partial shipments and more than one set of original multimodal transport documents are presented covering shipment, dispatch or taking in charge from one or more points of origin (as specifically allowed, or within the geographical area or range stated in the credit), such documents are acceptable, provided that they cover the movement of goods on the same means of conveyance and same journey and are destined for the same destination. In the event that more than one set of multimodal transport documents are presented and if they incorporate different dates of shipment, dispatch or taking in charge, the latest of these dates will be taken for the calculation of any presentation period, and such date must fall on or before any latest date of shipment, dispatch or taking in charge specified in the credit.
81. Shipment on more than one means of conveyance (more than one truck (lorry), vessel, aircraft, etc.) is a partial shipment, even if such means of conveyance leave on the same day for the same destination.

Clean Multimodal Transport Documents

82. Clauses or notations on multimodal transport documents that expressly declare a defective condition of the goods or packaging are not acceptable. Clauses or notations that do not expressly declare a defective condition of the goods or packaging (e.g., "packaging may not be sufficient for the journey") do not constitute a discrepancy. A statement that the packaging "is not sufficient for the journey" would not be acceptable.
83. If the word "clean" appears on a multimodal transport document and has been deleted, the multimodal transport document will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods Description

84. A goods description in the multimodal transport document may be shown in general terms not in conflict with that stated in the credit.

Corrections and Alterations

85. Corrections and alterations on a multimodal transport document must be authenticated. Such authentication must appear to have been made by the carrier or master (captain) or any one of their agents who may be different from the agent that may have issued or signed it, provided they are identified as an agent of the carrier or master (captain).
86. Non-negotiable copies of multimodal transport documents do not need to include any signature on, or authentication of, any alterations or corrections that may have been made on the original.

Freight and Additional Costs

87. If a credit requires that a multimodal transport document show that freight has been paid or is payable at destination, the multimodal transport document must be marked accordingly.
88. Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
89. If a credit states that costs additional to freight are not acceptable, a multimodal transport document must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded, e.g., costs covering the late return of containers, is not considered to be an indication of additional costs in this context.

Goods Covered by more than One Multimodal Transport Document

90. If a multimodal transport document states that the goods in a container are covered by that multimodal transport document plus one or more other multimodal transport documents, and the document states that all multimodal transport documents must be surrendered or words of similar effect, this means that all multimodal transport documents related to that container must be presented in order for the container to be released. Such a multimodal transport document is not acceptable unless all the multimodal transport documents form part of the same presentation under the same credit.

Application of UCP 600 Article 20

91. If a credit requires presentation of a bill of lading ("marine", "ocean" or "port-to-port" or similar) covering sea shipment only, UCP 600 article 20 is applicable.
92. To comply with UCP 600 article 20, a bill of lading must appear to cover a port-to-port shipment but need not be titled "marine bill of lading", "ocean bill of lading", "port-to-port bill of lading" or similar.

Full Set of Originals

93. A UCP 600 article 20 transport document must indicate the number of originals that have been issued. Transport documents marked "First Original", "Second Original", "Third Original", "Original", "Duplicate", "Triplicate", etc., or similar expressions are all originals. Bills of lading need not be marked "original" to be acceptable as an original bill of lading. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled "The Determination of an 'Original' Document in the Context of UCP 500 sub-Article 20(b)" is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes.

Signing of Bills of Lading

94. Original bills of lading must be signed in the form described in UCP 600 sub-article 20(a)(i) and indicate the name of the carrier, identified as the carrier.
a. If an agent signs a bill of lading on behalf of the carrier, the agent must be identified as agent and must identify on whose behalf it is signing, unless the carrier has been identified elsewhere on the bill of lading.
b. If the master (captain) signs the bill of lading, the signature of the master (captain) must be identified as "master" ("captain"). In this event, the name of the master (captain) need not be stated.
c. If an agent signs the bill of lading on behalf of the master (captain), the agent must be identified as agent. In this event, the name of the master (captain) need not be stated.
95. If a credit states "Freight Forwarder's Bill of Lading is acceptable" or uses a similar phrase, then the bill of lading may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as carrier or agent for the named carrier. In this event, it is not necessary to show the name of the carrier.

On Board Notations

96. If a pre-printed "Shipped on board" bill of lading is presented, its issuance date will be deemed to be the date of shipment unless it bears a separate dated on board notation, in which event the date of the on board notation will be deemed to be the date of shipment whether or not the on board date is before or after the issuance date of the bill of lading.
97. "Shipped in apparent good order", "Laden on board", "clean on board" or other phrases incorporating words such as "shipped" or "on board" have the same effect as "Shipped on board".

Ports of Loading and Ports of Discharge

98. While the named port of loading, as required by the credit, should appear in the port of loading field within the bill of lading, it may instead be stated in the field headed "Place of receipt" or the like, if it is clear that the goods were transported from that place of receipt by vessel and provided there is an on board notation evidencing that the goods were loaded on that vessel at the port stated under "Place of receipt" or like term.
99. While the named port of discharge, as required by the credit, should appear in the port of discharge field within the bill of lading, it may be stated in the field headed "Place of final destination" or the like if it is clear that the goods were to be transported to that place of final destination by vessel and provided there is a notation evidencing that the port of discharge is that stated under "Place of final destination" or like term.
100. If a credit gives a geographical area or range of ports of loading or discharge (e.g., "Any European Port"), the bill of lading must indicate the actual port of loading or discharge, which must be within the geographical area or range stated in the credit.

Consignee, Order Party, Shipper and Endorsement, Notify Party

101. If a credit requires a bill of lading to show that the goods are consigned to a named party, e.g., "consigned to Bank X" (a "straight" bill of lading), rather than "to order" or "to order of Bank X", the bill of lading must not contain words such as "to order" or "to order of" that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned "to order" or "to order of" a named party, the bill of lading must not show that the goods are consigned straight to the named party.
102. If a bill of lading is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
103. If a credit does not state a notify party, the respective field on the bill of lading may be left blank or completed in any manner.

Transhipment and Partial Shipment

104. Transhipment is the 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. If it does not occur between these two ports, unloading and reloading is not considered to be transhipment.
105. If a credit prohibits partial shipments and more than one set of original bills of lading are presented covering shipment from one or more ports of loading (as specifically allowed, or within the geographical area or range stated in the credit), such documents are acceptable provided that they cover the shipment of goods on the same vessel and same journey and are destined for the same port of discharge. In the event that more than one set of bills of lading are presented and incorporate different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and must fall on or before the latest shipment date specified in the credit. Shipment on more than one vessel is a partial shipment, even if the vessels leave on the same day for the same destination.

Clean Bills of Lading

106. Clauses or notations on bills of lading which expressly declare a defective condition of the goods or packaging are not acceptable. Clauses or notations which do not expressly declare a defective condition of the goods or packaging (e.g., "packaging may not be sufficient for the sea journey") do not constitute a discrepancy. A statement that the packaging "is not sufficient for the sea journey" would not be acceptable.
107. If the word "clean" appears on a bill of lading and has been deleted, the bill of lading will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods Description

108. A goods description in the bill of lading may be shown in general terms not in conflict with that stated in the credit.

Corrections and Alterations

109. Corrections and alterations on a bill of lading must be authenticated. Such authentication must appear to have been made by the carrier, master (captain) or any of their agents (who may be different from the agent that may have issued or signed it), provided they are identified as an agent of the carrier or the master (captain).
110. Non-negotiable copies of bills of lading do not need to include any signature on, or authentication of, any alterations or corrections that may have been made on the original.

Freight and Additional Costs

111. If a credit requires that a bill of lading show that freight has been paid or is payable at destination, the bill of lading must be marked accordingly.
112. Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
113. If a credit states that costs additional to freight are not acceptable, a bill of lading must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded, e.g., costs covering the late return of containers, is not considered to be an indication of additional costs in this context.

Goods Covered by more than One Bill of Lading

114. If a bill of lading states that the goods in a container are covered by that bill of lading plus one or more other bills of lading, and the bill of lading states that all bills of lading must be surrendered, or words of similar effect, this means that all bills of lading related to that container must be presented in order for the container to be released. Such a bill of lading is not acceptable unless all the bills of lading form part of the same presentation under the same credit.

Application of UCP 600 Article 22

115. If a credit requires presentation of a charter party bill of lading or if a credit allows presentation of a charter party bill of lading and a charter party bill of lading is presented, UCP 600 article 22 is applicable.
116. A transport document containing any indication that it is subject to a charter party is a charter party bill of lading under UCP 600 article 22.

Full Set of Originals

117. A UCP 600 article 22 transport document must indicate the number of originals that have been issued. Transport documents marked "First Original", "Second Original", "Third Original", "Original", "Duplicate", "Triplicate", etc., or similar expressions are all originals. Charter party bills of lading need not be marked "original" to be acceptable under a credit. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled "The Determination of an 'Original' Document in the Context of UCP 500 sub-Article 20(b)" is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes.

Signing of Charter Party Bills of Lading

118. Original charter party bills of lading must be signed in the form described in UCP 600 sub-article 22(a)(i).
a. If the master (captain), charterer or owner signs the charter party bill of lading, the signature of the master (captain), charterer or owner must be identified as "master" ("captain"), "charterer" or "owner".
b. If an agent signs the charter party bill of lading on behalf of the master (captain), charterer or owner, the agent must be identified as agent of the master (captain), charterer or owner. In this event, the name of the master (captain) need not be stated, but the name of the charterer or owner must appear.

On Board Notations

119. If a pre-printed "Shipped on board" charter party bill of lading is presented, its issuance date will be deemed to be the date of shipment unless it bears an on board notation, in which event the date of the on board notation will be deemed to be the date of shipment whether or not the on board date is before or after the issuance date of the document.
120. "Shipped in apparent good order", "Laden on board", "clean on board" or other phrases incorporating words such as "shipped" or "on board" have the same effect as "Shipped on board".

Ports of Loading and Ports of Discharge

121. If a credit gives a geographical area or range of ports of loading or discharge (e.g., "Any European Port"), the charter party bill of lading must indicate the actual port or ports of loading, which must be within the geographical area or range indicated but may show the geographical area or range of ports as the port of discharge.

Consignee, Order Party, Shipper and Endorsement, Notify Party

122. If a credit requires a charter party bill of lading to show that the goods are consigned to a named party, e.g., "consigned to Bank X" (a "straight" bill of lading), rather than "to order" or "to order of Bank X", the charter party bill of lading must not contain words such as "to order" or "to order of" that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned "to order" or "to order of" a named party, the charter party bill of lading must not show that the goods are consigned straight to the named party.
123. If a charter party bill of lading is issued to order or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
124. If a credit does not state a notify party, the respective field on the charter party bill of lading may be left blank or completed in any manner.

Partial Shipment

125. If a credit prohibits partial shipments, and more than one set of original charter party bills of lading are presented covering shipment from one or more ports of loading (as specifically allowed, or within the geographical area or range stated in the credit), such documents are acceptable, provided that they cover the shipment of goods on the same vessel and same journey and are destined for the same port of discharge, range of ports or geographical area. In the event that more than one set of charter party bills of lading are presented and incorporate different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and must fall on or before the latest shipment date specified in the credit. Shipment on more than one vessel is a partial shipment, even if the vessels leave on the same day for the same destination.

Clean Charter Party Bills of Lading

126. Clauses or notations on charter party bills of lading which expressly declare a defective condition of the goods or packaging are not acceptable. Clauses or notations that do not expressly declare a defective condition of the goods or packaging (e.g., "packaging may not be sufficient for the sea journey") do not constitute a discrepancy. A statement that the packaging "is not sufficient for the sea journey" would not be acceptable.
127. If the word "clean" appears on a charter party bill of lading and has been deleted, the charter party bill of lading will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods Description

128. A goods description in charter party bills of lading may be shown in general terms not in conflict with that stated in the credit.

Corrections and Alterations

129. Corrections and alterations on charter party bills of lading must be authenticated. Such authentication must appear to have been made by the owner, charterer, master (captain) or any of their agents (who may be different from the agent that may have issued or signed it), provided they are identified as an agent of the owner, charterer or the master (captain).
130. Non-negotiable copies of charter party bills of lading do not need to include any signature on, or authentication of, any alterations or corrections that may have been made on the original.

Freight and Additional Costs

131. If a credit requires that a charter party bill of lading show that freight has been paid or is payable at destination, the charter party bill of lading must be marked accordingly.
132. Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
133. If a credit states that costs additional to freight are not acceptable, a charter party bill of lading must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded, is not considered to be an indication of additional costs in this context.

Application of UCP 600 Article 23

134. If a credit requires presentation of an air transport document covering an airport-to-airport shipment, UCP 600 article 23 is applicable.
135. If a credit requires presentation of an "air waybill", "air consignment note" or similar, UCP 600 article 23 applies. To comply with UCP 600 article 23, an air transport document must appear to cover an airport-to-airport shipment but need not be titled "air waybill", "air consignment note" or similar.

Original Air Transport Document

136. The air transport document must appear to be the original for consignor or shipper. A requirement for a full set of originals is satisfied by the presentation of a document indicating that it is the original for consignor or shipper.

Signing of Air Transport Documents

137. An original air transport document must be signed in the form described in UCP 600 sub-article 23(a)(i) and indicate the name of the carrier, identified as carrier. If an agent signs an air transport document on behalf of a carrier, the agent must be identified as agent and must identify on whose behalf it is signing, unless the carrier has been identified elsewhere on the air transport document.
138. If a credit states "House air waybill is acceptable" or "Freight Forwarder's air waybill is acceptable" or uses a similar phrase, then the air transport document may be signed by a freight forwarder in the capacity of a freight forwarder without the need to identify itself as a carrier or agent for a named carrier. In this event, it is not necessary to show the name of the carrier.

Goods Accepted for Carriage, Date of Shipment, and Requirement for an Actual Date of Dispatch

139. An air transport document must indicate that the goods have been accepted for carriage.
140. The date of issuance of an air transport document is deemed to be the date of shipment unless the document shows a separate notation of the flight date, in which case this 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.

Airports of Departure and Destination

141. An air transport document must indicate the airport of departure and airport of destination as stated in the credit. The identification of airports by the use of IATA codes instead of writing out the name in full (e.g., LHR instead of London Heathrow) is not a discrepancy.
142. If a credit gives a geographical area or range of airports of departure or destination (e.g., "Any European Airport"), the air transport document must indicate the actual airport of departure or destination, which must be within the geographical area or range stated in the credit.

Consignee, Order Party and Notify Party

143. An air transport document should not be issued "to order" or "to order of" a named party, because it is not a document of title. Even if a credit calls for an air transport document made out "to order" or "to order of" a named party, a document presented showing goods consigned to that party, without mention of "to order" or "to order of", is acceptable.
144. If a credit does not state a notify party, the respective field on the air transport document may be left blank or completed in any manner.

Transhipment and Partial Shipment

145. Transhipment is the 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. If it does not occur between these two airports, unloading and reloading is not considered to be transhipment.
146. If a credit prohibits partial shipments and more than one air transport document is presented covering dispatch from one or more airports of departure (as specifically allowed, or within the geographical area or range stated in the credit), such documents are acceptable, provided that they cover the dispatch of goods on the same aircraft and same flight and are destined for the same airport of destination. In the event that more than one air transport document is presented incorporating different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and must fall on or before the latest shipment date specified in the credit.
147. Shipment on more than one aircraft is a partial shipment, even if the aircraft leave on the same day for the same destination.

Clean Air Transport Documents

148. Clauses or notations on an air transport document which expressly declare a defective condition of the goods or packaging are not acceptable. Clauses or notations on the air transport document which do not expressly declare a defective condition of the goods or packaging (e.g., "packaging may not be sufficient for the air journey") do not constitute a discrepancy. A statement that the packaging "is not sufficient for the air journey" would not be acceptable.
149. If the word "clean" appears on an air transport document and has been deleted, the air transport document will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods Description

150. A goods description in an air transport document may be shown in general terms not in conflict with that stated in the credit.

Corrections and Alterations

151. Corrections and alterations on air transport documents must be authenticated. Such authentication must appear to have been made by the carrier or any of its agents (who may be different from the agent that may have issued or signed it), provided it is identified as an agent of the carrier.
152. Copies of air transport documents do not need to include any signature of the carrier or agent (or shipper, even if required by the credit to appear on the original air transport document), nor any authentication of any alterations or corrections that may have been made on the original.

Freight and Additional Costs

153. If a credit requires that an air transport document show that freight has been paid or is payable at destination, the air transport document must be marked accordingly.
154. Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
155. If a credit states that costs additional to freight are not acceptable, an air transport document must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms that refer to costs associated with the loading or unloading of goods. A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded is not considered an indication of additional costs in this context.
156. Air transport documents often have separate boxes which, by their pre-printed headings, indicate that they are for freight charges "prepaid" and for freight charges "to collect", respectively. A requirement in a credit for an air transport document to show that freight has been prepaid will be fulfilled by a statement of the freight charges under the heading "Freight Prepaid" or a similar expression or indication, and a requirement that an air transport document show that freight has to be collected will be fulfilled by a statement of the freight charges under the heading "Freight to Collect" or a similar expression or indication.

Application of UCP 600 Article 24

157. If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP 600 article 24 is applicable.

Original and Duplicate of Road, Rail or Inland Waterway Transport Documents

158. If a credit requires a rail or inland waterway transport document, the transport document presented will be accepted as an original whether or not it is marked as an original. 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. With respect to rail waybills, the practice of many railway companies is to provide the shipper or consignor with only a duplicate (often a carbon copy) duly authenticated by the railway company's stamp. Such a duplicate will be accepted as an original.

Carrier and Signing of Road, Rail or Inland Waterway Transport Documents

159. The term "carrier" need not appear at the signature line provided the transport document appears to be signed by the carrier or an agent on behalf of the carrier, if the carrier is otherwise identified as the "carrier" on the transport document. International standard banking practice is to accept a railway bill evidencing date stamp by the railway company or railway station of departure without showing the name of the carrier or a named agent signing for or on behalf of the carrier.
160. The term "carrier" used in UCP 600 article 24 includes terms in transport documents such as "issuing carrier", "actual carrier", "succeeding carrier" and "contracting carrier".
161. Any signature, stamp or notation of receipt on the transport document must appear to be made either by:
a. the carrier, identified as the carrier, or
b. a named agent acting or signing for or on behalf of the carrier and indicating the name and capacity of the carrier on whose behalf that agent is acting or signing.

Order Party and Notify Party

162. Transport documents which are not documents of title should not be issued "to order" or "to order of" a named party. Even if a credit calls for a transport document which is not a document of title to be made out "to order" or "to order of" a named party, such a document showing goods consigned to that party, without mention of "to order" or "to order of", is acceptable.
163. If a credit does not stipulate a notify party, the respective field on the transport document may be left blank or completed in any manner.
Partial Shipment
164. Shipment on more than one means of conveyance (more than one truck (lorry), train, vessel, etc.) is a partial shipment, even if such means of conveyance leave on the same day for the same destination.

Goods Description

165. A goods description in the transport document may be shown in general terms not in conflict with that stated in the credit.

Corrections and Alterations

166. Corrections and alterations on a UCP 600 article 24 transport document must be authenticated. Such authentication must appear to have been made by the carrier or any one of their named agents, who may be different from the agent that may have issued or signed it, provided they are identified as an agent of the carrier.
167. Copies of UCP 600 article 24 transport documents do not need to include any signature on, or authentication of, any alterations or corrections that may have been made on the original.

Freight and Additional Costs

168. If a credit requires that a UCP 600 article 24 transport document show that freight has been paid or is payable at destination, the transport document must be marked accordingly.
169. Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.

Application of UCP 600 Article 28

170. If a credit requires presentation of an insurance document such as an insurance policy, insurance certificate or declaration under an open cover, UCP 600 article 28 is applicable.

Issuers of Insurance Documents

171. Insurance documents must appear to have been issued and signed by insurance companies or underwriters or their agents or proxies. If required by the insurance document or in accordance with the credit terms, all originals must appear to have been countersigned.
172. An insurance document is acceptable if issued on an insurance broker's stationery, provided the insurance document has been signed by an insurance company or its agent or proxy, or by an underwriter or its agent or proxy. A broker may sign as agent for the named insurance company or named underwriter.

Risks to Be Covered

173. An insurance document must cover the risks defined in the credit. Even though a credit may be explicit with regard to risks to be covered, there may be reference to exclusion clauses in the document. If a credit requires "all risks" coverage, this is satisfied by the presentation of an insurance document evidencing any "all risks" clause or notation, even if it is stated that certain risks are excluded. An insurance document indicating that it covers Institute Cargo Clauses (A) satisfies a condition in a credit calling for an "all risks" clause or notation.
174. Insurance covering the same risk for the same shipment must be covered under one document unless the insurance documents for partial cover each clearly reflect, by percentage or otherwise, the value of each insurer's cover and that each insurer will bear its share of the liability severally and without pre-conditions relating to any other insurance cover that may have been effected for that shipment.

Dates

175. An insurance document that incorporates an expiry date must clearly indicate that such expiry date relates to the latest date that loading on board or dispatch or taking in charge of the goods (as applicable) is to occur, as opposed to an expiry date for the presentation of any claims thereunder.

Percentage and Amount

176. An insurance document must be issued in the currency of, and, as a minimum for, the amount required by the credit. The UCP does not provide for any maximum percentage of insurance coverage.
177. If a credit requires the insurance cover to be irrespective of percentage, the insurance document must not contain a clause stating that the insurance cover is subject to a franchise or an excess deductible.
178. If it is apparent from the credit or from the documents that the final invoice amount only represents a certain part of the gross value of the goods (e.g., due to discounts, pre-payments or the like, or because part of the value of the goods is to be paid at a later date), the calculation of insurance cover must be based on the full gross value of the goods.

Insured Party and Endorsement

179. An insurance document must be in the form as required by the credit and, where necessary, be endorsed by the party to whose order claims are payable. A document issued to bearer is acceptable where the credit requires an insurance document endorsed in blank and vice versa.
180. If a credit is silent as to the insured party, an insurance document evidencing that claims are payable to the order of the shipper or beneficiary would not be acceptable unless endorsed. An insurance document should be issued or endorsed so that the right to receive payment under it passes upon, or prior to, the release of the documents.

Basic Requirement

181. A requirement for a certificate of origin will be satisfied by the presentation of a signed, dated document that certifies to the origin of the goods.

Issuers of Certificates of Origin

182. A certificate of origin must be issued by the party stated in the credit. However, if a credit requires a certificate of origin to be issued by the beneficiary, the exporter or the manufacturer, a document issued by a chamber of commerce will be deemed acceptable, provided it clearly identifies the beneficiary, the exporter or the manufacturer as the case may be. If a credit does not state who is to issue the certificate, then a document issued by any party, including the beneficiary, is acceptable.

Contents of Certificates of Origin

183. The certificate of origin must appear to relate to the invoiced goods. The goods description in the certificate of origin may be shown in general terms not in conflict with that stated in the credit or by any other reference indicating a relation to the goods in a required document.
184. Consignee information, if shown, must not be in conflict with the consignee information in the transport document. However, if a credit requires a transport document to be issued "to order", "to the order of shipper", "to order of the issuing bank" or "consigned to the issuing bank", the certificate of origin may show the applicant of the credit, or another party named therein, as consignee. If a credit has been transferred, the name of the first beneficiary as consignee would also be acceptable.
185. The certificate of origin may show the consignor or exporter as a party other than the beneficiary of the credit or the shipper on the transport document.

UCP 600

2008-08-04T04:15:00.000-07:00

ICC Uniform Customs and Practice for Documentary Credits

The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilised by bankers and commercial parties in more than 175 countries in trade finance. Some 11-15% of international trade utilises letters of credit, totalling over a trillion dollars (US) each year.

Historically, the commercial parties, particularly banks, have developed the techniques and methods for handling letters of credit in international trade finance. This practice has been standardized by the ICC (International Chamber of Commerce) by publishing the UCP in 1933 and subsequently updating it throughout the years. The ICC has developed and moulded the UCP by regular revisions, the current version being the UCP600. The result is the most successful international attempt at unifying rules ever, as the UCP has substantially universal effect. The latest revision was approved by the Banking Commission of the ICC at its meeting in Paris on 25 October 2006. This latest version, called the UCP600, formally commenced on 1 July 2007.

UCP 600

The latest revision of UCP is the sixth revision of the rules since they were first promulgated in 1933. It is the fruit of more than three years of work by the ICC's Commission on Banking Technique and Practice.

The UCP remain the most successful set of private rules for trade ever developed. A range of individuals and groups contributed to the current revision including: the UCP Drafting Group, which waded through more than 5000 individual comments before arriving at this final text; the UCP Consulting Group, consisting of members from more than 25 countries, which served as the advisory body; the more than 400 members of the ICC Commission on Banking Technique and Practice who made pertinent suggestions for changes in the text; and 130 ICC National Committees worldwide which took an active role in consolidating comments from their members.

During the revision process, notice was taken of the considerable work that had been completed in creating the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 645. This publication has evolved into a necessary companion to the UCP for determining compliance of documents with the terms of letters of credit. It is the expectation of the Drafting Group and the Banking Commission that the application of the principles contained in the ISBP, including subsequent revisions thereof, will continue during the time UCP 600 is in force. At the time UCP 600 is implemented, there will be an updated version of the ISBP to bring its contents in line with the substance and style of the new rules.

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 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
1 `
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, 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, 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.

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 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 transship 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 as evidenced by the non-negotiable sea waybill.

d. Clauses in a non-negotiable sea waybill stating that the carrier reserves the right to transship 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.

Letter of Guarantees in detail

2008-05-19T06:17:00.000-07:00

Meaning
A bank guarantee is an undertaking by the bank at the request of a party, whereby the bank – in the event of default by the principal in the fulfillment of his obligations to make payment to the beneficiary within the limits of specified sum of money and within the specified period of time. So, bank guarantees are usually limited with respect to amount and time. As for as the time is concerned - a grace period is usually granted to the beneficiary to claim under the guarantee. This is basically given for the time taken by the beneficiary to present his claim.

Guarantees are generally given by banks, insurance companies and other guarantors.

These guarantees are given in the form of tender bonds, performance guarantees and repayment guarantees in relation to projects in the same country or another country which involves supply of goods or services or the performance of work. These guarantees are currently an important tool of international trade.

Parties involved in guarantees and their interest differs. Lets see the same:

1.The beneficiary: He is the party inviting the tender or He is the party awarding the contract or He is the person who wants to receive a compensatory sum of money incase the tenderer fails to perform his obligations or fails to perform the contract in accordance with its terms or to secure repayment of any payment or advances made by him if the principal fails to perform the contract.

2.The principal : He is the party tendering the contract or He is the party to whom the contract has been awarded.

3.Guarantor : Guarantor is a party who will meet his commitment in terms of the guarantee, without becoming involved in possible disputes between beneficiary and principal.

4.The Instructing Party : The new rules recognise the existing widespread practice whereby an instructing party may forward to the guarantor instructions received from or on behalf of the principal and counter-guarantee such instructions.

Need for a Guarantee
1.To provide an assurance of the intention of the principal to sign the contract.
2.To safegaurd against the principal failing to meet his obligations under such a contract
3.To protect interest of a party awarding the contract (beneficiary) in respect of the repayment of payments and advances made by him in the even of principal not fulfilling the contract terms.

Types of guarantee :

1.Conditional and Unconditional Guarantees.
2.Fixed and Fluctuating Guarantees.
3.Financial Guarantees.
4.Performance / Non-financial guarantees.

1.Conditional and Unconditional Guarantees :

In case of conditional guarantees, the right to claim payment is conditional on external factors besides the beneficiary’s demand for payment. For example – If a guarantee states the clause that this guarantee is payable only on a particular ruling of a court

An unconditional / demand guarantee on the other hand, is payable on first demand by the beneficiary. Generally, banks prefer to issue unconditional guarantees so that they can avoid their obligation to pay being contingent on external factors. Because, these unconditional guarantees will afford them certainty about their obligation.

Fixed and Fluctuating Guarantees :

Under a fixed guarantee, the bank;s liability can be ascertained at the time of issuance.

On the other hand, in case of fluctuating guarantee, the bank’s liability can fluctuate subject to a fixed maximum amount.

1.Banks can exercise control over the fluctuating liability by retaining the right to cancel the guarantee at any time and crystallising their obligation on the date of cancellation.
2.Enough care should be taken in the text of guarantee which should not prohibit bank from terminating the guarantee before the expiry date.
3.The bank should give prior intimation to the parties involved in the guarantees for termination of guarantee.
4.The termination of guarantee should take place only upon the receipt of notice by the respective parties.
5.The bank’s liability would then be limited to the debt incurred prior to the receipt of notice.

Financial guarantees : A guarantee to ensure adherence to a financial commitment is a financial guarantee.

1.Disputed income tax / Customs & excise duties : Banks will issue guarantee to guard against non-payment of tax / duty amount.
2.Customs / Excise guarantee for clearance of goods : To guard against non-payment of duty amount after final assessment by the competent authority.
3.Insurance premium guarantee : To guard against non-payment of premium on demand from the insurance company.
4.Guarantee for grant of facilities to another company : To guard against non-payment of dues by the company to whom such facilities are granted.
5.Deferred payment Guarantee : To guard against non-payment of bill of exchange / loan instalment on the due date.
6.Bill of lading / Shipping guarantee : Indemnifies the transporter against all adverse consequences resulting from the delivery of goods without surrender of the transport document.

Performance / Non-financial guarantees : A guarantee to ensure adherence to a commitment to perform a certain act as per stipulated conditions is a performance guanrantee.

1.Advance payment guarantee / Prepayment bond : To guard against non-delivery of goods/services for which advance has been received from the buyer.
2.Performance guarantee / Retention bond : to guard against non-performance of contracted obligations by the seller of the goods or the provider of the services.
3.Security deposit / Tenders / EMD / Bid bonds : To guard against failure of the principal to accept the contract as per the terms and conditions laid down in his tender / bid.
4.Retention money guarantee : To guard against non-compliance (with the terms of the contract) of the project executed by the principal.
5.Export performance guarantee : To guard against non-performance of the contracted export obligation.

General Aspects of Guarantee :

1.Benefits to the parties:

Benefits to the bank : It gets commission income.
Benefits to the principal / Instructing party : (a) It enables better liquidity by deferring payment and making it contingent on non-performance. (b) Cheaper than fund-based facilities except where it involves credit substitution.
Benefits to the beneficiary : Certiainty of payment, in the event of non-performance, guaranteed by the bank.

2.Important points to be noted before issuing a guarantee :

Since the bank is liability to pay on behalf of the principal, it must be protected against any loss arising out of meeting such an obligation. So, principal need to indemnify the bank against all losses that the bank may incur in the performance of its obligation to pay. Such indemnification is called counter guarantee / counter indemnify.

The bank can obtain further comfort by specifying the place of payment under a guarantee and the governing law. So that the beneficiary cannot claim with another branch / head office of the guarantor bank.

Date of expiry of the guarantee.

Total amount payable in local currency, for guarantees issued in foreign currency, and whether the extent exchange control regulations permit remittance in case of invocation.

Forece majeure clause – A guarantee should not be invoked due to non-performance arising on account of factors beyond the control of the principal.

For safety sake – the principal’s liability under the counter guarantee or any cash collateral / margine, should not be released until the expiry of the claims period or the return of the cancelled guarantee, whichever is earlier.

3.Bank guarantees are different from letters of credit. Payment under bank guarantee is contingent on non-performance whereas under LCs it is contingent on performance

4.A bank guarantee can be amended and whenever an amendment ‘weakens’ the BG for the beneficiary, his prior written permission should be obtained. Ex. Increase in amount requires a written permission from the principal whereas the decrease in the amount should have the written permission of the beneficiary.

5.Bank guarantee expires when – the validity period has ended or the BG is returned for cancellation or the entire amount of BG is paid by the bank or the bank is released from its obligations.

6.Documents required :
For grant of Bank guarantee limits
Hypothecation / Pledge agreement for collateral security formalities connected with registration charges where necessary.

For guarantee issuance :
Counter guarantee / indemnity from the principal.
Formal application for BG issuance.

BANKING THEORY & PRACTICE

2007-08-02T03:17:00.000-07:00

1.WHAT IS SWIFT: SWIFT stands for Society of World Wide Inter bank Financial Telecommunication. It is a communication system that advices member banks to transfer funds from one member to another. It is not a payment system, but an information and instruction network. Based in Brussels, the SWIFT network of terminals links thousand five hundred banks in Europe, USA, Africa, Asia, Australia and Latin America.
2.WHAT IS SWAP: The means by which a barrower can exchange the type of founds must easily raised for the type of founds required usually through the intermediary of a bank. A swap will enable them to exchange the currency the interest-rate swap, in which borrowers exchange fixed-for floating-interest rates.
3.WHAT IS VOSTRO ACCOUNT: A local currency account held by a foreign bank with a bank in India itself.
4.WHAT IS NOSTRO ACCOUNT: A foreign currency account held by a bank at foreign country.
5.WHAT IS DEMAT ACCOUNT: An electronic form of keeping shares in an account is called demat account.
6.WHAT IS FORECLOSURE: The legal right of lender of money if the borrower fails to repay the money or part of if on due date. The lender must apply to court to be permitted to sell the property that has held us security for debt.
7.WHAT IS JOINT ACCOUNT: Account held by two or more persons jointly is called joint A/c.
8.WHAT IS RD: A deposit were a fixed amount is paid on monthly installment.
9.WHAT IS EMI & NEMI: Equated monthly installments (EMI) is an amount which represents the combination of interest + principle proposionatly.
10.WHAT IS LC : Letter of credit is performing bank guarantee. A letter from one banker to another authorizing the payment of specified sum to the person named in the letter under specified condition. Usually in a forex. Irrevocable letter of credit cannot be cancelled by the person who opens it or by the issuing bank without the beneficiary’s consent, whereas a revocable letter of credit can.
11.WHAT IS RTGS: Real time gross settlements. It is a elementary process were realize at pan takes place at some day.
12.WHAT IS DELINQUENCY: Failure to make a payment on a debt or obligation by the specified due date
13.WHAT IS FLEXI DEPOSIT: It is a deposit in which the interest rate can fluctuate based on the duration or time.
14.WHAT IS SWEEP: A service provided by a bank which automatically transfers funds above a certain level from a current account to a higher interest earning account.
15.WHAT IS TD: It is also called time deposit or term deposit. It is the period of time before a deposit security expires or is returned(renewed).
http://sivaninandu.blogspot.com/: Tax deduced at source. It denotes an amount that can be deductible from income or profits from a deposit in accordance with the tax legislation.
17.WHAT IS PLR: It stands for prime lending Rate. It is the rate of interest at which the banks lend money to first-class borrowers. It is similar in operation to the base rate.
18.WHAT IS OD: It represents an over draft. A lean made to a customer with a Cheque account at a bank in which the account is allowed to go into debit, usually up to a specified limit.
19.WHAT IS STANDING INSTRUCTION: An instruction by a customer to a bank to pay a specified amount of money on a specified date or dates to a specified payee.
20.WHAT IS ECS: It stands for electronic clearing system. The insurance premium payments and house electricity payment. It serves for utility bill payments.
21. What is EFT: It stands for electronic funds transfer. It represents the transfer of money from one bank account to another by means of communication. It is also for credit card payments.
22.WHAT IS ACCRUAL: It represents accrued charges. An amount incurred as a charge in a given accounting period but not paid by the end of that period.
23.WHAT IS MORTGAGE: An interest in property created as a security fro a loan or payment of a debit and terminated on payment of the loan or debit.
24.WHAT IS PLEDGE: An article given by a barrower (pledgeer) to a lender (pledge) as a security fro a debit. It remains in the ownership of the pledgeer although it is in the possession of the pledge until the debt is repaid.
25.WHAT IS HYPOTHECATION: An authority given to a banker, usually a letter of hypothecation to enable the bank to sell goods that have been pledged to them as security for loan.
26.WHAT IS BALANCE SHEET: A statement of the total assets and liabilities of an organization of a particular date, usually the last day of the accounting period.
27.WHAT IS DOUBLE ENTRY BOOK KEEPING: The records kept enable a profit and loss account and the balance sheet to be compiled. Most firms now use business software packages of programs to enable the books to be kept by computer.
28.WHAT IS NOMINAL ACCOUNT: A ledger account that is not a personal account in that it bears the name of a concept eg. Light of heat, bad debits, investments, etc.,
29.WHAT IS PERSONAL ACCOUNT: Account used to record transactions with persons, for example “debtors and creditors.
30.WHAT IS REAL ACCOUNT: A ledger account for some types of property (eg. Land & building, plat, investment, stock) to distinguish it from a nominal account, which would be for revenue or expense items.
31.WHAT IS DAY BOOK: A specialized journal or book of prime entry recording specific transactions. For example, the sales day book records invoice for sales, the purchase day book records invoices received from suppliers. Day book entries are transferred to memorandum ledgers, such as the debtors ledger and the creditors ledger, while totals of entries are transferred to the nominal ledger control accounts. Such as the debtors ledger control account and the creditors ledger control account.
32.WHAT IS LEDGER: A collection of accounts of a similar type. Traditionally, a ledger was a large book with separate pages for each account.
33.WHAT IS PAY ORDER: It is also called banker’s Cheque or Manager’s Cheque. It is a Cheque drawn by a banker on himself. It is payable only at the issuing bank to it is not transferable.
34.WHAT IS DEMAND DRAFT: It is an instrument drawn by one branch of a bank upon another branch of the same bank instructing the latter to pay a certain sum of money to the person named there in or to his order.
35.WHAT IS CHEQUE: A Cheque is a negotiable instrument and it is freely transferable from one person to another. It performs all the functions of a currency note through it is not a legal tender money. It is an instrument in writing containing an unconditional order, signed by the bearer directing a certain person to pay a certain money only to or order of a certain person.
36.WHAT IS CHEQUE GENERAL CROSSING: According to negotiable instrument action general crossing is where a Cheque bears across it’s face a addition of words and company or its abbreviation there of between two parallel traverse lines, simply, either with or without the words not negotiable.
37.WHAT IS CHEQUE SPECIAL CROSSING: Its where a Cheque bears across its face an addition of the name of a banker either with or without the words not negotiable that addition shall be deemed to be crossed specially.
38.WHAT IS ENDORSEMENT: According to negotiable instrument act when the maker or holder of a negotiable instrument signs the same, side of a Cheque for the purpose of negotiation.
39.WHAT IS ALLONGE: If the back side of the instrument is not sufficient to make endorsements, a piece of paper may be attached there to for making further endorsements. Such piece of paper is known as allonge.
40.WHAT IS ORDER CHEQUE/BEARER CHEQUE: A Cheque is an order Cheque if it is expressed to be payable to the order of a certain person or to a certain person without restricting its further transfer. A bearer Cheque is transferable by men delivery without endorsement. A bearer Cheque is always a bearer instrument but an order Cheque will become a bearer one when it is endorsed in black.
41.WHAT IS I/W CLNG: It is inward Cheques for collection for outward returns.
42.WHAT IS O/W CLNG: It includes outward cheques for booking collection and inward returns.
43.WHAT IS TELLER: The us name for a bank or building society cashier, ie., some one who accepts deposit and pays out cash over the counter to customer.
44.WHAT IS BANK GUARANTEE: An undertaking given by a bank to settle a debit should the debtor fails to do so. A bank guarantee can be used as a security for a loan but the banks themselves will require good cover in cash or certain indemnity before they issue.
45.WHAT IS DPN: Demand promissory note. It is promises to pay guarantee to or to the lending for society very week sectors such as agriculture and formers where the interest rate is low.
46.WHAT IS PRIORITY SECTOR LENDING: It is the lending for society very week sectors such as agriculture and formers where the interest rate is low.
47.WHAT IS SPREAD: It is spreading the areas of lending into different kinds of society where a loss in one society will be adjusted with the income from others.
48.WHAT IS CRR(Cash Reserve Ratio): Out of demand and time liabilities 10% is maintained as a cash in RBI.
49.WHAT IS SLR(Statutory Liquidity Ratio) : Out of demand and time liabilities some percent is kept as security in RBI.
50.WHAT IS LCD: It stands for low cast deposit. It includes a mixture of demand deposits ie., pure current & savings deposit.
51.WHAT IS INSURANCE: A Legal contract in which an insurer promises to pay a specified amount to another party , the insured , if a particular event such as Death (or) Loss of property happens.
52.WHAT IS MUTUAL FUND: A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund
53.WHAT IS REFINANCING OR HIREPURCHASE: A method of buying goods in which the purchase takes possession of them as soon as an initial installment of the price( a deposit) has been paid ; ownership is obtained when all the agreed number of subsequent installments have been completed.
54.WHAT IS LIQUIDITY: The extent to which an organization assets are Liquid (Assets held in cash or in something that can be readily returned into cash), enabling it to pay its debts when they fall due and also to move into new investment opportunities .
55.WHAT IS PREMINUM: (a) The consideration payable for a contract of insurance (or) life assurance. (b) An amount in excess of the nominal value of a share , bond or other security.
56.WHAT IS BONUS: An extra amount of money additional to the proceeds, which is distributed to a policy holder by an insurer who has made a profit on the investment of a Life Assurance fund.
57.WHAT IS EQUITY: It represents the stocks & shares i.e., the ordinary shares of a company , especially those of a publicly owned quoted company.
58.WHAT IS FACE VALUE OF A STOCK: The nominal value (Nominal price ) printed on the face of a security . This is also known as the par value. It may be more (or) less than the market value.
59.WHAT IS STOCK BROKING & STOCK EXCHANGE: A stock broker is an agent who buys & sells securities on a stock exchange ( A market for the sale & purchase of securities in which prices are controlled by demand & supply ) on behalf of clients and receives remuneration in the form of commission.
60.WHAT IS FLEXI BOND: A bond in which the interest i.e., the coupon rate changes according to market is called Flexi Bond.
61.WHAT IS DIVIDEND WARRENT: The Cheque issued by a company to it share holders when paying dividends. It states the Tax deducted and the net amount paid. This document must be sent by non-taxpayers to the Inland Revenue, when claiming back the tax.
62.WHO IS A MINOR: A person who has not attained 18 years of age is a minor. But if a guardian is appointed by the court for a person during the period of minority, he will remain as a minor till he/she attain the age of 21 years.
63.WHO IS A TRUSTEE & BENEFICIARY: A trust is created to look after the properties of a person, usually a deceased . The person appointed to manage such properties is called a trustee and the person for whose benefit the trust is created is called beneficiary.
64.WHO IS AN ASSIGNOR & ASSIGNEE: Assignment means transfer of an existing or future right on property of debt by one person to another. The person who transfers the property is the assignor and the person to whom it is transferred is the assignee.
65.WHAT IS INDEMNITY BOND: An undertaking by a bank’s client who has lost a document (such as a share certificate (or) bill of lading) that the bank will be held harmless against any consequences of the document’s absence if it proceeds to service the documents that have not been mislaid.
66.WHAT IS DEFERRED PAYMENT: It refers the Hire Purchase , a method of buying goods in which the ownership passes when the contract is signed.
67.WHAT IS GRANISHEE ORDER: An order made by a judge on behalf of a judgment creditor restraining a third party (often a bank) called a garnishee from paying money to the judgment debtor until sanctioned to do so by the court.
68.WHAT IS CASH CREDIT: A cash credit is an arrangement by which a customer is allowed by a banker to borrow money up to a certain limit. Such an arrangement is made against the security of tangible assets or guarantees. The amount of cash credit sanctioned need not be drawn by the customer at once. He may draw such amount as and when required. Further he can pay back the amount so withdrawn whenever he has a surplus. The interest will be charged on the actual amount utilized and for the period of utilization only. The cash credit system is for commercial and industrial concerns to get long term funds for doing regular business.
69.WHAT IS SECURED OVER DRAFT: Under A customer is allowed to withdraw over and above the credit balance in his current account upto certain limit . The interest will be charged only on the amount actually overdrawn by him.
70.WHAT IS A CREDIT CARD: A plastic card issued by a bank (or) finance organization to enable holders to obtain credit in shops , hotels , restaurants , petrol stations etc., The retailer (or) trader receives monthly payments from the credit card company equal to its total sales in the month by means of that credit card ,less a service charge.
71.WHAT IS DEBIT CARD: A plastic card issued by a bank to enable its customers with Cheque accounts to pay for goods (or) service at certain retail outlets by using the telephone network to debit their Cheque accounts directly. It is also known as payment card.
72.WHO IS SOLE PROPEREITOR: A single person owns the assets of the company . He is held responsible for his company’s liabilities.
73.WHO IS A PARTNER: 1. Partners share equally in the profit (or) loss of the partnership 2. Partners are not entitled to receive salaries. 3.Patners are not entitled to interest on their capital . 4. On dissolution the assets is settled for the creditors first and then to partners.
74.CAN A MINOR BE A PARTNER: A minor may be admitted as a partner to the benefits of a partnership firm with the consent of all partners. But he/she is not personally liable for the debts of the firm except to the extent of his share in the profits and properties of the firm.
75.WHAT IS PRIVATE LIMITED COMPANY: Any limited company that is not a public limited company. Such a company is not permitted to offer its shares for sale to public and it is free from the rules that apply to public limited companies.
76.WHAT IS PUBLIC LIMITED COMPANY: A company registered under Companies Act 1980 as a public company . It may offer shares and securities to the public . Regulation of such companies is
77.WHAT IS MEANT BY PCL: PCL stands for Packing Credit Loan. It’s the loan given for the manufacture & export of goods & its expenses made for the export of the commodity.
78.WHAT IS Pre-Shipment & Post Shipment FINANCE: The finance charges for the Pre-Shipment expenses & finance charges for the post shipment activities.
79.WHAT IS DISCOUNTING & PURCHASING OF A BILL: The term “Purchase “ is used in case of demand bills which are payable in demand , whereas the term ‘discounting’ is used in case of Usance bills which are payable on due dates. In both cases the amount of the bill less bank charges will be credited to customer’s account.
80.WHAT IS INCUMBERANCE CERTIFICATE: A lien or claim on property. A liability on real property. For example, a mortgage encumbers title to real estate because the lender has an interest in the property. a claim (as a lien) against property; specifically : an interest or right (as an easement or a lease) in real property that may diminish the value of the estate but does not prevent the conveyance of the estate
81.WHAT IS A JOINT STOCK COMPANY: A company in which the members pool their stock and trade on the basis of their joint stock. This differs from the earliest type of company . The merchant corporations (or) regulated companies of 14th century in which members tracked their own stock subject to the rules of the company.
82.WHAT IS MERCHANT BANKING: A bank that formerly specialized in financing foreign trade , an activity that often grew out of its own merchanting business they function as accepting houses.
83.WHAT IS CHIT FUND: A collection of members called a chit group makes their contribution in the form of money to collect a chit amount and they bid in an auction to be awarded with the prized money which is equal to the chit amount minus the discount and the foreman's commission.
84.WHAT IS MEANT BY NEGOTIABLE INSTRUMENT: A document of title that can be freely negotiated. Such documents are cheques and bills of exchange in which the stated payee of the instrument can negotiate the instrument by either inserting the name of a different payee(or) making the document ‘open’ by endorsing it on the reverse.
85.WHAT IS ANTE-DATED CHEQUE: A Cheque which bears a date prior to the date of its issue is known as ante-dated Cheque.
86.WHAT IS POST-DATED CHEQUE: A Cheque which bears a date subsequent to the date of its issue is called a post-dated Cheque.
87.WHAT IS STALE CHEQUE: If a Cheque bears a date before 6 months from the current date, then the Cheque becomes invalid and it’s called Stale Cheque.
88.WHAT IS LIEN: The right of one person to retain possession of goods owned by another until the possessions claim against the owner has been satisfied.
89.WHAT IS A FORGED INSTRUMENT: An instrument which illegally bears a signature of the maker of the Cheque without the knowledge of the maker (Drawer) of the Cheque.
90.WHAT IS ASSIGMENT: The act of transferring, or a document (a deed of assignment) transferring property to some other person . Examples of assignment include the transfer of rights under a contract or benefits under a trust to another person.
91.WHAT IS WAREHOUSE LOAN: It is a Loan against the security of a warehouse receipt . By this receipt a warehouse keeper acknowledges the receipt of goods for warehousing & promises to deliver them to the person mentioned their on request.
92.WHAT IS BILL OF LADING: A document acknowledging the shipment of a consignor’s goods for carriage by sea. It is used primarily when the ship is carrying goods belonging to a number of consignors (a general ship). In this case, each consignor receives a bill issued (normally by the master of the ship)on behalf of either the shipowner or a character under a charterparty. The bill serves three functions: it is a receipt for the goods it summarizes the terms of the contract of carriage; and it acts as a document of title to the goods.
93.WHAT IS BILL OF EXCHANGE: An unconditional order in writing addressed by one person (that is the drawer ) to another (drawee) and signed by the person giving it requiring the drawee to pay on demand or at a fixed or determinable future time a specified sum of money to or to the order of a specified person (the payee) or to the bearer. If the bill is payable at a future time the drawee signifies acceptance, which makes the drawee the party primarily liable upon the bill; the drawer and endorsers may also be liable upon a bill. The use of bills of exchange enables one person to transfer another an enforceable right to a sum of money. A bill of exchange in not only transferable but also negotiable , since , if a person without an enforceable right to the money transfers a bill to a holder in due course , the latter obtains a good title to it.
94.WHAT IS BILL OF ENTRY: It is the customs control copy for the proof of a foreign transaction held for the clearance of the imported goods.
95.WHO IS CALLED AUTHORISED DEALER: A bank which is licensed to hold any foreign exchange transaction by itself is referred to as authorized dealer of a foreign exchange.
96.WHAT IS TRAVELLERS CHEQUE: A Cheque issued by a Bank , Travel Agency , Credit – Card company etc., to enable a traveler to obtain cash in a foreign currency in abroad . They may be cashed at banks, exchange bureaus, restaurants etc., in abroad on proof identity.
97.WHAT IS FOREIGN EXCHANGE: A trade between two different countries which involves a transaction in foreign currency . In simple terms foreign exchange means buying and selling of currencies ( Say Dollars).
98.WHAT IS NRO ACCOUNT: When a Resident becomes a Non-Resident , the domestic resident account of the resident becomes Non-Resident Ordinary (NRO)Account . (a) Can be in the form of savings, Term Deposit. (b) Non- Repatriable.(c) Credit comes by foreign remittance only.

99.WHAT IS NRE ACCOUNT: It is Non-Resident external rupee account . (a) It can be in the form savings , Term deposit (b) No local in-flow allowed. (c) It can be Repatriable(amount can be taken & spent abroad ). (d) Only by foreign remittance.
100.WHAT IS FCNR ACCOUNT: It is a foreign currency non-resident account. (a) It is maintained in foreign currency . (b) Can be Repatriable .(C) Mainted only as a term deposits. (d) Can be closed and converted to Indian rupee when needed.
101.WHAT IS FIXED EXCHANGE RATE: A rate of exchange between one currency and another that is fixed by government and maintained by that government buying or selling its currency to support or depress its currency.
102.WHAT IS FLOATING EXCHANGE RATE: A rate of exchange between one currency and another that is permitted to float according to market forces. Most major currencies and countries now have floating exchange rates but governments and central banks intervene buying or selling currencies when rates become too high or too low.
103.WHAT IS FIXED RATE LOAN: A loan in which the interest rate is fixed at the start of the loan. It is standard for bond issue, but unusual for bank borrowing.
104.WHAT IS FLOATING RATE LOAN: A loan that does not have a fixed interest rate throughout its life. Floating-rate loans can take various forms but they are all tied to short term market indicators in the UK this is usually the London Inter Bank Offered Rate.
105.WHAT IS ECGC: Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit. Being essentially an export promotion organization, it functions under the administrative control of the Ministry of Commerce, Government of India. It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community. ECGC is the fifth largest credit insurer of the world in terms of coverage of national exports. The present paid-up capital of the company is Rs.500 crores and authorized capital Rs.1000 crores. The paid-up capital is expected to be enhanced to Rs.800 crores
106.WHAT IS MEANT BY CAT-A, CAT-B&CAT-C BRANCH: CAT –A branch deals mainly into foreign exchange and which got a dealing room for bidding on the inter-bank price rates. CAT –B branch deals mainly into foreign exchange in addition to its retail transactions and can make the payment directly. But a CAT – C branch cannot make the payment for the FOREX transaction directly. It has to route through the CAT – A branch.
107.WHAT IS MICR CLEARING: The ordinary clearing instrument which is encoded by the MICR codes(16 digits) is called MICR clearing instrument.
108. WHAT IS NON-MICR CLEARING: A clearing instrument without the MICR encodings and which is cleared the same day itself (it can be Inter Bank Clearing or High Value Clearing).
109.WHAT IS NON-INTEREST INCOME (NII): It represents the service charges collected from the customer for any kind of transaction held in a bank.
110.WHAT IS CALLED NI-ACT: A government act that represents the document of title that can be freely negotiated. Such documents are Cheques and bill of exchange in which the stated payee of the instrument can negotiate the instrument by either inserting the name of a different payee or making the document ‘open’ by endorsing it (signing once the name) usually on the reverse.
111.WHAT IS SUPER SAVINGS PACK: also called rainbow savings pack where a suitable amount above the minimum balance in savings account is transferred to term deposit account where they get higher rate of interest .it is the combination of savings account and fixed deposit account
112.WHAT IS TERM LOAN: A fixed-period loan usually for 1 to 10 years that is paid back by the borrower in regular installments with interest it may be secured or unsecured.
113.WHAT IS RUNNING LOAN: A loan or advance in which both credit and debit transactions takes place within the sanction limit is called running loan ( Drawing Power will be equivalent to sanctioned limit).
114.WHAT IS “DONATIO MORTIS CAUSA”: It means a gift made in contemplation of death. A fixed deposit receipt may also be made as a subject matter of such gift. Hence a holder of a fixed deposit receipt can give it as a gift to another person in anticipation of his death. In this case it will become valid and the donee will get a good title only on the death of the donor. On the other hand, if the donee dies before the death of the donor, it will become void.
115.WHAT IS BANK STATEMENT: A regular record, issued by a bank showing the credit and debit entries in a customer’s cheque account, together with the current balance. The frequency of issue will vary with the customer’s needs and the volume of transactions going through the account. Cash dispensers enable customers to ask for a statement whenever they are needed.

About Guarantees

2007-08-02T03:16:00.000-07:00

Standby letters of credit are remarkably versatile instruments for a bank to represent to a third party that they are willing to make payments on their customer’s behalf, if and when called for. Most often, these payments are to be made when the customer has failed or refused to do so themselves. The value of the bank’s commitment lies in the fact the bank is obligated to pay, even in the event of a dispute, as long as the documents specified in the L/C are presented as required.

Federal regulations prohibit most banks in the U.S. from issuing guarantees. To fill this void, American banks developed the standby letter of credit as a means of financial support for a variety of trade and investment needs. Originally, these same regulations even required that all letters of credit be "conspicuously titled" as letters of credit. Banks in other countries have long issued letters of credit that they have designated to be "demand guarantees" or "independent guarantees." These are not to be confused with "ancillary" or "contract" guarantees, which are not letters of credit. As U.S. banks are now, as of 1996, free to use any desired designation, the important thing to keep in mind is not what the arrangement is called, but how it works. Any letter of credit should state that it is subject to the Uniform Customs and Practice for Documentary Credits to ensure that it will work as expected.

Regardless of what it’s called, a letter of credit represents the issuing bank’s undertaking to pay the named beneficiary a sum of money upon presentation of specified documents conforming to the terms and conditions of the credit. As with a commercial L/C, the intent of a standby letter of credit is to substitute the creditworthiness of the bank for that of its customer, the applicant. The commercial letter of credit facilitates a commercial transaction through the use of shipping documents and negotiable drafts. A standby letter of credit, however, often takes the form of an obligation by the issuer to the beneficiary (1) to repay money borrowed by or advanced to or for the applicant, (2) to make payment of an indebtedness of the applicant, or (3) to make payment because of a claimed default by the applicant in the performance of an obligation. As such, it may require documents are simple as a statement signed by the beneficiary attesting to the existence of one of these types of situations.

Note that although the beneficiary of a standby credit may be required by the L/C to present a written statement claiming that some sort of default has occurred, in no case does the issuing bank agree to guarantee the completion of any project or contract nor is it bound to make determinations of fact regarding the underlying transaction (as is generally the case with a "contract" or "ancillary"

guarantee). The bank’s responsibilities and liabilities are financial only. If the beneficiary presents documents that comply with the letter of credit requirements, the bank must pay regardless of any assertions of fraud or non-validity made by the applicant. Furthermore, the applicant is legally bound to reimburse the bank. For this reason, the applicant for a standby letter of credit must trust the beneficiary not to draw improperly under the L/C.

The applicant for a standby letter of credit should consider the risks involved in having a bank issue a standby letter of credit for its account and can take two important steps to minimize these risks. The applicant should, just as in the commercial letter of credit transaction, know the beneficiary and be comfortable with the beneficiary’s character and business reputation. Many sources can assist the applicant: trade associations, credit reporting firms, chambers of commerce, etc. Second, the applicant and the beneficiary should negotiate and document the terms of the underlying transaction. This may take the form of a written contract or be as simple as a purchase order or pro forma invoice. Once the issuing bank has made payment, the applicant’s recourse to recover the payment through legal channels is only as strong as his ability to prove that the beneficiary has violated the contract.

If the beneficiary of a standby letter of credit is in a foreign country and the letter of credit is to remedy non-performance, the applicant should be sure that his contract with the beneficiary relieves the applicant from responsibility for non-performance due to force majeure. Strikes, military coups, hurricanes, and other events beyond the control of the applicant which prevent the applicant from fulfilling the contract should not constitute non-performance of the applicant’s obligations.

Bid Bonds

Government buyers and buyers involved in sizable projects frequently request suppliers and contractors who are bidding on a sale or project to post "bid bonds" in the form of standby letters of credit, usually for a percentage of the contract amount. These are used for the bidding process only and assure the buyer that the original bid will be honored by the bidder selected. The winning bidder is commonly required to post a "performance bond" (see below) to prove his ability to honor his bid. If the performance bond is not posted in a timely manner, the amount of the bid bond will be forfeited as a penalty.

Performance Bonds

When a buyer awards a large contract for goods and/or supplies, especially commodities like oil and grain, to a particular seller, he wants assurance that the agreed price will be honored and that the seller will not otherwise default on the contract. Similarly, throughout the life of a project, the contracting party is interested in ensuring that the project will in fact be completed in accordance with the terms and conditions of the contract. In cases like these, a standby letter of credit may be required to provide financial compensation in the event of default. These are generally designed to decrease in amount over the life of the contract until completion.
Performance bonds are also used to back up international warranties that machinery or other goods will work properly for a certain period of time. If the machinery breaks down and the manufacturer fails to provide timely repairs, the buyer may arrange repairs himself and draw on the L/C for costs incurred and/or a penalty.

Advance Payment Bonds

When the manufacturer who has been awarded a sale begins work, partial payment may be required in advance for materials, start-up costs, or general working capital. The buyer often requests a bond or standby letter of credit for assurance that such advances will be used for the project. In the event of contract default, the advance can be recovered from the bank that issued the standby letter of credit. These standby L/Cs can be issued to decrease in amount progressively as shipments take place.

Credit Line Support

When a buyer and seller agree to an "open account" or "cash-in-advance" relationship, a standby letter of credit can be used as financial security. In these situations, payments are made directly between the buyer and seller, but, in the event of default (e.g., non-payment in an open account transaction or defective goods in a cash-in-advance transaction), the affected party has recourse to a commercial bank.

Evergreen Letters of Credit
Sometimes a standby letter of credit will be issued with an initial expiration date but containing a clause that states that it will be automatically extended for additional periods unless the issuing bank provides notice to the beneficiary stating otherwise. Such a clause is called an "evergreen clause." Such a credit, in effect, has no expiration date and will remain open until the beneficiary returns it for cancellation since the beneficiary will simply draw the full amount of the credit if he receives notice from the bank that it is not going to extend it. Of course, the applicant’s obligation to reimburse the issuing bank remains in effect as long as the credit is open.

Clean Letters of Credit

In some instances, the beneficiary will request a letter of credit in which the only document required is a draft drawn on the issuing bank. This is sometimes called a "clean letter of credit." The issuing bank is required to pay, and the applicant in turn is required to reimburse, once the draft is presented. Such a letter of credit is very open and the beneficiary’s ability to draw is limited only by the amount and expiration date of the letter of credit; it may be thought of as giving the beneficiary a cashier’s check and asking him not to cash it unless necessary.

URC

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Uniform Rules for Collections No. 522 1995 Revision in force as of January 1, 1996
Leaflet Version, ICC No.522.

The ICC Uniform rules for collections were first published by the ICC in 1956. Revised versions were issued in 1967 and 1978. This present revision was adopted by the Council of the ICC in June 1995. It is issued with the title “ICC Uniform Rules for Collections” as ICC Publication No 522. This English language gives the official text of the 1995 Revision.

A GENERAL PROVISIONS AND DEFINITIONS

ARTICLE 1

Application of URC 522

a.The Uniform Rules for Collections, 1995 Revision, ICC Publication No 522, shall apply to all collections as defined in ARTICLE 2 where such rules are incorporated into the text of the ‘collection instruction' referred to in ARTICLE 4 and are binding on all parties thereto unless otherwise expressly agreed or contrary to the provisions of a national, state or local law and/or regulation which cannot be departed from.
b.Banks shall have no obligation to handle either a collection or any collection instruction or subsequent related instructions.
c.If a bank elects, for any reason, not to handle a collection or any related instructions received by it, it must advise the party from whom it received the collection or the instructions by telecommunication or, if that is not possible, by other expeditious means, without delay.

ARTICLE 2
Definition of Collection
For the purposes of these ARTICLEs :
a.‘Collection' means the handling by banks of documents as defined in Sub-ARTICLE 2 b.in accordance with instructions received , in order to :
1. obtain payment and/or acceptance or
2. deliver documents against payment and/or against acceptance. or
3. deliver documents on other terms and conditions.
b.‘Documents' means financial documents and/or commercial documents:
1. ‘Financial documents‘ means bills of exchange, promissory notes, cheques, or other similar instruments used for obtaining the payment of money.
2. ‘Commercial documents’ means invoices, transport documents, documents of title or other similar documents, or any other documents whatsoever, not being financial documents.
c.'Clean Collection‘ means collection of financial documents not accompanied by commercial documents
d.'Documentary collection‘ means collection of :
1. Financial documents accompanied by commercial documents.
2. Commercial documents not accompanied by financial documents.

ARTICLE 3

Parties to a Collection
a For the purposes of these ARTICLEs the ‘parties thereto‘ are :
1.the ‘principal’ who is the party entrusting the handling of a collection to a bank;
2.the ‘remitting bank’ which is the bank to which the principal has entrusted the handling of a collection;
3.the ‘collecting bank’ which is any bank, other than the remitting bank, involved in processing the collection;
4.the ‘presenting bank’ which is the collecting bank making presentation to the drawee.
b The ‘drawee’ is the one to whom presentation is to be made in accordance with the collection instruction.

B FORM AND STRUCTURE OF COLLECTIONSARTICLE 4
Collection Instruction
a 1. All documents sent for collection must be accompanied by a collection instruction indicating that the collection is subject to URC 522 and giving complete and precise instructions. Banks are only permitted to act upon the instructions given in such collection instruction, and in accordance with these Rules.
2. Banks will not examine documents in order to obtain instructions.
3. Unless otherwise authorised in the collection instruction, banks will disregard any instructions from any party/bank other than the party/bank from whom they received the collection.
b A collection instruction should contain the following items of information as appropriate.
1. Details of the bank from which the collection was received including full name, postal and SWIFT addresses, telex, facsimile numbers and reference.
2. Details of the principal including full name, postal address, and if applicable telex, telephone and facsimile numbers.
3. Details of the drawee including full name, postal address, or the domicile at which presentation is to be made and if applicable telex, telephone and facsimile numbers.
4. Details of the presenting bank, if any, including full name, postal address, and if applicable telex, telephone and facsimile numbers.
5. Amount(s) and currency(ies) to be collected
6. List of documents enclosed and the numerical count of each document.
7. a Terms and conditions upon which payment and or acceptance is to be obtained.
b Terms of delivery of documents against :
1) payment and/or acceptance
2) others terms and conditions
It is the responsibility of the party preparing the collection instruction to ensure that the terms for the delivery of documents are clearly and unambiguously stated, otherwise banks will not be responsible for any consequences arising there from.
8. Charges to be collected, indicating whether they may be waived or not.
9. Interest to be collected, if applicable, indicating whether it may be waived or not, including:
a. rate of interest
b. interest period
c. basis of calculation (for example 360 or 365 days in a year) as applicable
10. Method of payment and form of payment advice.
11. Instructions in case of non-payment, non-acceptance and/or non-compliance with other instructions.
c 1. Collection instructions should bear the complete address of the drawee or of the domicile at which the presentation is to be made. If the address is incomplete or incorrect, the collecting bank may, without any liability and responsibility on its part, endeavour to as certain the proper address.
2. The collecting bank will not be liable or responsible for any ensuing delay as a result of an incomplete/incorrect address being provided.

C FORM OF PRESENTATION
ARTICLE 5
Presentation
a For the purposes of these Articles, presentation is the procedure whereby the presenting bank makes the documents available to the drawee as instructed.
b The collection instruction should state the exact period of time within which any action is to be taken by the drawee.
Expressions such as ‘first’, ‘prompt’, ‘immediate’, and the like should not be used in connection with presentation or with reference to any period of time within which documents have to be taken up or for any other action that is to be taken by the drawee. If such terms are used banks will disregard them.
c Documents are to be presented to the drawee in the form in which they are received, except that banks are authorized to affix any necessary stamps, at the expense of the party from whom they received the collection unless otherwise instructed, and to make any necessary endorsements or place any rubber stamps or other identifying marks or symbols customary to or required for the collection operation.
d For the purpose of giving effect to the instructions of the principal, the remitting bank will utilise the bank nominated by the principal as the collecting bank. In the absence of such nomination, the remitting bank will utilize any bank of its own, or another bank’s choice in the country of payment or acceptance or in the country where other terms and conditions have to be complied with.
e The documents and collection instruction may be sent directly by the remitting bank to the collecting bank or through another bank as intermediary.
f If the remitting bank does not nominate a specific presenting bank, the collecting bank may utilise a presenting of its choice.
ARTICLE 6
Sight/Acceptance
In the case of documents payable at sight the presenting bank must make presentation for payment without delay. In the case of documents payable at a tenor other than sight the presenting bank must, where acceptance is called for, make presentation for acceptance without delay, and where payment is called for, make presentation for payment not later than the appropriate maturity date.
ARTICLE 7
Release of Commercial Documents
Documents Against Acceptance (D/A) vs. Documents Against Payment (D/P)
a Collections should not contain bills of exchange payable at a future date with instructions that commercial documents are to be delivered against payment.
b If a collection contains a bill of exchange payable at a future date, the collection instruction should state whether the commercial documents are to be released to the drawee against acceptance (D/A) or against payment (D/P)
In the absence of such statement commercial documents will be released only against payment and the collecting bank will not be responsible for any consequences arising out of any delay in the delivery of documents.
c If a collection contains a bill of exchange payable at a future date and the collection instruction indicates that commercial documents are to be released against payment, documents will be released only against such payment and the collecting bank will not be responsible for any consequences arising out of any delay in the delivery of documents.
ARTICLE 8
Creation of Documents
Where the remitting bank instructs either the collecting bank or the drawee is to create documents (bills of exchange, promissory notes, trust receipts, letters of undertaking or other documents) that were not included in the collection, the form and wording of such documents shall be provided by the remitting bank, otherwise the collecting bank shall be not be liable or responsible for the form and wording of any such documents provided by the collecting bank and/or the drawee.

D LIABILITIES AND RESPONSIBILITIES
ARTICLE 9
Good faith and Reasonable care
Banks will act in good faith and exercise reasonable care
ARTICLE 10
Documents vs. Goods/Services/Performances
a Goods should be despatched directly to the address of a bank or consigned to or to the order of a bank without prior agreement on the part of that bank.
Nevertheless, in the event that goods are despatched directly to the address of a bank or consigned to or to the order of a bank for release to a drawee against payment or acceptance or upon other terms and conditions without prior agreement on the part of that bank, such bank shall have no obligation to take delivery of the goods, which remain at the risk and responsibility of the party despatching the goods.
b Banks have no obligation to take any action in respect of the goods to which a documentary collection relates, including storage and insurance of the goods even when specific instructions are given to do so. Banks will only take such action if, when, and to the extent that they agree to do so in each case. Notwithstanding the provisions of Sub-ARTICLE 1 c this rule applies even in the absence of any specific advice to this effect by the collecting bank.
c Nevertheless, in the case that banks take action for the protection of the goods, whether instructed or not, they assume no liability or responsibility with regard to the fate and/or conditions of the goods and/or for any acts and/or omissions on the part of any third parties entrusted with the custody and/or protection of the goods. However, the collecting bank must advise without delay the bank from which the collection instruction was received of any such action taken.
d Any charges and/or expenses incurred by banks in connection with any action taken to protect the goods will be for the account of the party from whom they received the collection.
e 1. Notwithstanding the provisions of Sub-ARTICLE 10 a. where the goods are consigned to or to the order of the collecting bank and the drawee has honoured the collection by payment, acceptance or other terms and conditions and the collecting bank arranges for the release of the goods, remitting bank shall be deemed to have authorised the collecting bank to do so.
2. Where a collecting bank on the instructions of the remitting bank or in terms of Sub-ARTICLE 10 e (1.) above arranges for the release of the goods, the remitting bank shall indemnify such collecting bank for all damages and expenses incurred.
ARTICLE 11
Disclaimer For Acts of an Instructed Party
a Banks utilising the services of another bank or other banks for the purpose of giving effect to the instructions of the principal, do so for the account and at the risk of such principal.
b Banks assume no liability or responsibility should the instructions they transmit not be carried out, even if they have themselves taken the initiative in the choice of such other bank(s).
c A party instructing another party to perform services shall be bound by and liable to indemnify the instructed party against all obligations and responsibilities imposed by foreign laws and usages.
ARTICLE 12
Disclaimer on Documents Received
a Banks must determine that the documents received appear to be as listed in the collection instruction and must advise by telecommunication or, if that is not possible, by other expeditious means, without delay, the party from whom the collection instruction was received of any documents missing, or found to be other than listed.
Banks have no further obligation in this respect.
b If the documents do not appear to be listed, the remitting bank shall be precluded from disputing the type and number of documents received by the collecting bank.
c Subject to Sub-ARTICLE 5 c and Sub-ARTICLEs 12 a and 12 b above, banks will present documents as received without further examination.
ARTICLE 13
Disclaimer on Effectiveness of Documents
Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents(s), or for the general and/or particular conditions stipulated in the document(s) or superimposed thereon; nor do they assume any liability or responsibility for the description quantity; weight , quality, conditions, packing, delivery, value or existence of the goods represented by any document(s), or for the good faith or acts and/or omissions, solvency, performance or standing of the consignors, the carriers, the forwarders, the consignees or the insurers of the goods, or any other person whomsoever.
ARTICLE 14
Disclaimer on Delays, Loss in Transit and Translation
a Banks assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any message(s), letter(s) or document(s), or for delay, mutilation or other error(s) arising in transmission of any telecommunication or for error(s) in translation and or interpretation of technical terms.
b Banks will not be aliable or responsible for any delays resulting from the need to obtain clarification of any instructions received.
ARTICLE 15
Force Majeure
Banks assume no liability or responsibility for consequences arising out of the interruption of their business by Acts of God, riots, civil commotions, insurrections, wars, or any other causes beyond their control or by strikes or lockouts.

E PAYMENT
ARTICLE 16
Payment Without Delay
a Amounts collected (less charges and/or disbursements and/or expenses where applicable) must be made available without delay to the party from whom the collection instruction was received in accordance with the terms and conditions of the collection instruction.
b Notwithstanding the provisions of Sub-ARTICLEs 1 c and unless otherwise agreed, the collecting bank will effect payment of the amount collected in favour of the remitting bank only.
ARTICLE 17
Payment in Local Currency
In the case of documents payable in the currency of the country of payment (local currency), the presenting bank must, unless otherwise instructed in the collection instruction release the documents to the drawee against payment in local currency only if such currency is immediately available for disposal in the manner specified in the collection instruction.
ARTICLE 18
Payment in Foreign Currency
In the case of documents payable in the currency other than that of the country of payment (foreign currency), the presenting bank must, unless otherwise instructed in the collection instruction, release the documents to the drawee against payment in the designated foreign currency only if such foreign currency can immediately be remitted in accordance with the instructions given in the collection instruction.
ARTICLE 19
Partial Payments
a In respect of clear collections, partial payments may be accepted if and to the extent to which and on the conditions on which partial payments are authorized by the law in force in the place of payment. The financial document(s) will be released to the drawee only when full payment thereof has been received.
b In respect of documentary collections, partial payments will only be accepted if specifically authorised in the collection instruction. However, unless otherwise instructed, the presenting bank will not be responsible for any consequences arising out of any delay in the delivery of the documents.
c In all cases partial payments will be accepted only subject to compliance with the provisions of either ARTICLE 17 or ARTICLE 18 as appropriate.
Partial payment, if accepted, will be dealt with in accordance with the provisions of ARTICLE 16.

F INTEREST CHARGES AND EXPENSES
ARTICLE 20
Interest
a If the collection instruction specifies that interest is to be collected and the drawee refuses to pay such interest, the presenting bank may deliver the document(s) against payment or acceptance or on other terms and conditions as the case may be, without collecting such interest, unless Sub-ARTICLE 20 c applies.
b Where such interest is to be collected, the collection instruction must specify the rate of interest, interest period and basis of calculation.
c Where the collection instruction expressly states that interest may not be waived and the drawee refuses to pay such interest the presenting bank will not deliver documents and will not be responsible for any consequences arising out of any delay in the delivery of document(s). When payment of interest has been refused, the presenting bank must inform by telecommunication or, if that is not possible, by other expeditious means without delay the bank from which the collection instruction was received.
ARTICLE 21
Charges and Expenses
a If the collection instruction specifies that collection charges and/or expenses are to be for account of the drawee and the drawee refuses to pay them, the presenting bank may deliver the document(s) against payment or acceptance or on other terms and conditions as the case may be, without collecting charges and/or expenses, unless Sub-ARTICLE 21 b applies.
Whenever collection charges and/or expense are so waived they will be for the account of the party from whom the collection was received and may be deducted from the proceeds.
b Where the collection instruction expressly states that charges and/or expenses may not be waived and the drawee refuses to pay such charges and/or expenses, the presenting bank will not deliver documents and will not be responsible for any consequences arising out of any delay in the delivery of the document(s). When payment of collection charges and/or expenses has been refused the presenting bank must inform by telecommunication or, if that is not possible, by other expeditious means without delay the bank from whom the collection instruction was received.
c In all cases where in the express terms of a collection instruction or under these Rules, disbursement and/or expenses and/or collection charges are to be borne by the principal, the collecting bank(s) shall be entitled to recover promptly outlays in respect of disbursements, expenses and charges from the bank from which the collection instruction was received, and the remitting bank shall be entitled to recover promptly from the principal any amount so paid out by it, together with its own disbursements, expenses and charges, regardless of the fate of the collection.
d Banks reserve the right to demand payment of charges and/or expenses in advance from the party from whom the collection instruction was received, to cover costs in attempting to carry out any instructions, and pending receipt of such payment, also reserve the right not to carry out such instructions.

G OTHER PROVISIONS
ARTICLE 22
Acceptance
The presenting bank is responsible for seeing that the form of the acceptance of a bill of exchange appears to be complete and correct, but is not responsible for the genuineness of any signature or for the authority of any signatory to sign the acceptance.
ARTICLE 23
Promissory Notes and Other Instruments
The presenting bank is not responsible for the genuineness of any signature or for the authority of any signatory to sign a promissory notes, receipt, or other instruments.
ARTICLE 24
Protest
The collection instruction should give specific instructions regarding protest (or other legal process in lieu thereof), in the event of non-payment or non- acceptance.
In the absence of such specific instructions, the banks concerned with the collection have no obligation to have the document(s) protested (or subject to other legal process in lieu thereof) for non-payment or non- acceptance.
Any charges and/or expenses incurred by banks in connection with such protest, or other legal process, will be for the account of the party from whom the collection instruction was received.
ARTICLE 25
Case-of-Need
If the principal nominates a representative to act as case-of-need in the event of non-payment and/or non-acceptance the collection instruction should clearly and fully indicate the powers of such case-of-need. In the absence of such indication banks will not accept any instructions from the case-of-need.
ARTICLE 26
Advises
Collecting banks are to advise fate in accordance with the following rules:
a Form of Advice
All advises or information from the collecting bank to the bank from which the collection instruction was received, must bear appropriate details including, in all cases, the latter bank’s reference as stated in the collection instruction.
b Method of Advice
It shall be the responsibility of the remitting bank to instruct the collecting bank regarding the method by which the advises detailed in c (1.), c (2.) and c (3.) are to be given. In the absence of such instructions, the collecting bank will send the relative advises by the method of its choice at the expense of the bank from which the collection instruction was received.
c 1. Advice of Payment
The collecting bank must send without delay advice of payment to the bank from which the collection instruction was received, detailing the amount or amounts collected, charges and/or disbursements and/or expenses deducted, where appropriate, and method of disposal of the funds.
2. Advice of Acceptance
The collecting bank must send without delay advice of acceptance to the bank from which the collection instruction was received.
3. Advice of Non-payment and/or Non-Acceptance
The presenting bank should endeavour to ascertain the reasons for non-payment and/or non-acceptance and advise accordingly, without delay, the bank from which it received the collection instruction.
The presenting bank must send without delay advice of non-payment and/or advice of non- acceptance to the bank from which it received the collection instruction.
On receipt of such advice the remitting bank must give appropriate instruction as to the further handling of the documents. If such instructions are not received by the presenting bank within 60 days after its advice of non-payment and/or non-acceptance, the documents may be returned to the bank from which the collection instruction was received without any further responsibility on the part of the presenting bank.

Financial Documents

2007-08-01T02:38:00.003-07:00

Bill of Exchange
Place & date of execution …………………(1)…………….…… (2) .
At/On …………………(3)…………….……, for value received, pay against this draft
to the order of ………………………….……(4)…..…………………...……………...
the sum of
…..…………………...……………...(5)…..…………………...……………...
effective payment to be made in …………(6)…………… without deduction for and free of any present or future taxes, impost, collection charges, levies or duties of any nature.

This draft is payable at …………………(7)…………….……

Drawn on: ……………………(9)……………………
…..……………(8)………………..
By

A Draft/Bill of Exchange should be filled out as follows:

(1) The Issue Date and the Name of the City and Country in which it was issued

(2) The Amount in Numbers of each Draft

(3) The Maturity Date or Tenor for each Draft

(4) The Draft will be issued to the order of Name of Exporter, which is normally also the Drawer (see (9)).

(5) The Amount in Words

(6) Effective Payment to be made in Name of Currency

(7) Each Draft is payable at Name of Domicile Bank (who will present the Draft and collect payment from the Drawee at Maturity), with their Location

(8) Box on the bottom will have the Name and full Address of the Drawee

(9) The blank area to the right of the box would contain the Name of the Drawer and the signature(s) of the authorized individual(s) who are drawing the Draft on behalf of the exporter, thereby demanding acceptance and ultimate payment

(10) This area, labeled “Accepted,” will have the authorized signature(s) of the Drawee and indicate the Maturity Date

(11) If the draft is to be accepted and also guaranteed, the Guarantor Bank will indicate their name and sign “Per Aval.” (The Guarantor Bank will normally also be the Domicile Bank (see (7)).)

Promissory Note

Place & date of execution …………………(1)…………….…… (2) .
On …………………(3)…………….……, the undersigned, for value received, promise(s) to
pay to the order of ………………………….……(4)…..…………………...……………...
the sum of
…..…………………...……………...(5)…..…………………...……………...
effective payment to be made in …………(6)…………… without deduction for and free of any present or future taxes, impost, collection charges, levies or duties of any nature.

This note is payable at …………………(7)…………….……

……………………(8)……………………

By

A Promissory Note should be filled out as follows:

(1) The Issue Date and the Name of the City and Country in which it was issued

(2) The Amount in Numbers of each Note

(3) The Maturity Date of each Note.

(4) The Note will be issued to the order of Name of Payee.

(5) The Amount in Words.

(6) Effective Payment to be made in Name of Currency

(7) Each Note is payable at Name of Domicile Bank (who will present the Note and collect payment from the Maker at Maturity), with their Location

(8) This area would contain the Name of the Maker and the signature(s) of the authorized individual(s) who are signing for the Maker, thereby promising to pay

(9) If the draft is to be guaranteed, the Guarantor Bank will indicate their name and sign “Per Aval.” (The Guarantor Bank will normally also be the Domicile Bank (see (7)).)

ISBP

2007-07-30T05:39:00.000-07:00

INTRODUCTION
At its May 2000 meeting the Commission on Banking Technique and Practice of the International Chamber of Commerce (ICC Banking Commission) established a task force to document international standard banking practice for the examination of documents presented under documentary credits issued subject to the Uniform Customs and Practice for Documentary Credits, the International Chamber of Commerce’s Publication No. 500 (UCP).
The international standard banking practices documented in this publication are consistent with the UCP and the Opinions and Decisions of the ICC Banking Commission. This document does not amend UCP. It explains how the practices articulated in the UCP are to be applied by documentary practitioners. It is, of course, recognized that the law in some countries may compel a different practice than that stated here.
No single publication can anticipate all the terms or the documents that may be used in connection with documentary credits or their interpretation under the UCP and the standard practice it reflects. However, the task force preparing this publication has endeavoured to cover terms commonly seen on a day-to-day basis and the documents most often presented under documentary credits.
It should be noted that any term in a documentary credit which modifies or affects the applicability of a provision of the UCP may also have an impact on international standard banking practice. Therefore, in considering the practices described in this publication, parties must take into account any term in a documentary credit that expressly excludes or modifies a provision in an article of the UCP. This principle is implicit throughout this publication, whether or not stated, but it is sometimes expressly repeated for purposes of emphasis or for illustration. Where examples are given, these are solely for the purpose of illustration and are not exhaustive.
This publication reflects international standard banking practice for all parties to a documentary credit. Since applicants’ obligations, rights, and remedies depend upon their undertaking with the issuing bank, the performance of the underlying transaction, and the timeliness of any objection under applicable law and practice, applicants should not assume that they may rely on these provisions in order to excuse their obligations to reimburse the issuing bank. The incorporation of this publication into the terms of a documentary credit should be discouraged, as the requirement to follow agreed practices is implicit in the UCP.
Because this publication reflects current documentary credit practice as provided by ICC national committees and individual ICC members, it will be of considerable use in the formulation of any future revision of the UCP.

PRELIMINARY CONSIDERATIONS

The application and issuance of the credit
1) The terms of a credit are independent of the underlying transaction even if a credit expressly refers to that transaction. To avoid unnecessary costs, delays, and disputes in the examination of documents, however, the applicant and beneficiary should carefully consider which documents should be required, by whom they should be produced, and the time frame for presentation.
2) The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. Unless expressly stated otherwise, a request to issue or amend a credit authorizes an issuer to supplement or develop the terms in a manner necessary or desirable to permit the use of the credit.
3) The applicant should be aware that the UCP contains Articles such as Articles 13, 20, 21, 23, 24, 26, 27, 28, 39, 40, 46 and 47 that define terms in a manner that may produce unexpected results unless the applicant fully acquaints itself with these provisions. For example, a credit requiring presentation of a marine bill of lading and containing a prohibition against transhipment will, in most cases, have to exclude UCP sub-Article 23(d) to make the prohibition against transhipment effective.
4) A credit should not require presentation of documents that are to be issued and/or countersigned by the applicant. If a credit is issued including such terms, the beneficiary must either seek amendment or comply with them and bear the risk of failure to do so.
5) Many of the problems that arise at the examination stage could be avoided or resolved by careful attention to detail in the underlying transaction, the credit application, and issuance of the credit as discussed.

GENERAL PRINCIPLES

Abbreviations
6) The use of generally accepted abbreviations, for example “Ltd.” instead of “Limited”, “Int’l” instead of “International”, “Co.” instead of “Company”, “kgs” or “kos.” instead of “kilos”, “Ind” instead of “Industry”, “mfr” instead of “manufacturer” or “mt” instead of “metric tons” - or vice versa - does not make a document discrepant.
7) Virgules (slash marks “/”) may have different meanings, and unless apparent in the context used, should not be used as a substitute for a word.

Certifications and declarations
8) A certification, declaration or the like may either be a separate document or contained within another document as required by the credit. If the certification or declaration appears in another document which is signed and dated, any certification or declaration appearing on that document does not require a separate signature or date if the certification or declaration appears to have been given by the same entity that issued and signed the document.

Corrections and alterations
9) Corrections and alterations of information or data in documents, other than documents created by the beneficiary, must appear to be authenticated by the party who issued the document or by a party authorized by the issuer to do so. Corrections and alterations in documents which have been legalized, visaed, or the like, must appear to be authenticated by the party who legalized, visaed, etc., the document. The authentication must show by whom the authentication has been made and include that party’s signature or initials. If the authentication appears to have been made by a party other than the issuer of the document, the authentication must clearly show in which capacity that party has authenticated the correction or alteration.
10) Corrections and alterations in documents issued by the beneficiary itself, except drafts, which have not been legalized, visaed or the like, need not be authenticated. See also “Drafts and calculation of maturity date”.
11) The use of multiple type styles or font sizes or handwriting in the same document does not, by itself, signify a correction or alteration.
12) Where a document contains more than one correction or alteration, either each correction must be authenticated separately or one authentication must be linked to all corrections in an appropriate way. For example, if the document shows three corrections numbered 1, 2 and 3, one statement such as “Correction numbers 1, 2 and 3 above authorized by XXX” or similar, will satisfy the requirement for authentication.

Dates
13) Drafts, transport documents and insurance documents must be dated even if a credit does not expressly so require. A requirement that a document, other than those mentioned above, be dated, may be satisfied by reference in the document to the date of another document forming part of the same presentation (e.g. where a shipping certificate is issued which states “date as per bill of lading number xxx” or similar terms). Although it is expected that a required certificate or declaration in a separate document be dated, its compliance will depend on the type of certification or declaration that has been requested, its required wording, and the wording that appears within it. Whether other documents require dating will depend on the nature and content of the document in question.
14) Any document, including a certificate of analysis, inspection certificate and pre-shipment inspection certificate, may be dated after the date of shipment. However, if a credit requires a document evidencing a pre-shipment event (e.g. pre-shipment inspection certificate), the document must, either by its title or content, indicate that the event (e.g. inspection) took place prior to or on the date of shipment. A requirement for an “inspection certificate” does not constitute a requirement to evidence a pre-shipment event. Documents must not indicate that they were issued after the date they are presented.
15) A document indicating a date of preparation and a later date of signing is deemed to be issued on the date of signing.
16) The rule for the latest date for presentation in sub-Article 43(a) of UCP applies only to presentations that are required to contain one or more original transport documents. Transport documents are those covered by UCP Articles 23-29. In any event, documents must be presented not later than the expiry date of the Credit.
17) Phrases often used to signify time on either side of a date or event:
a) “within 2 days after” indicates a period from the date of the event until 2 days after the event.
b) “not later than 2 days after” does not indicate a period, only a latest date. If an advice must not be dated prior to a specific date, the credit must so state.
c) “at least 2 days before” indicates that something must take place not later than 2 days before an event. There is no limit as to how early it may take place.
d) “within 2 days of” indicates a period 2 days prior to the event until 2 days after the event.

18) The term “within” when used in connection with a date excludes that date in the calculation of the period.
19) Dates may be expressed in different formats, e.g. the 12th of November 2003 could be expressed as 12 Nov 03, 12Nov03, 12.11.2003, 12.11.03, 2003.11.12, 11.12.03, 121103, etc. Provided that the date intended can be determined from the document or from other documents included in the presentation, any of these formats are acceptable. To avoid confusion it is recommended that the name of the month should be used instead of the number.

Documents to which the UCP Transport Articles do not apply
20) Some documents commonly used in relation to the transportation of goods, e.g. Delivery Order, Forwarder’s Certificate of Receipt, Forwarder’s Certificate of Shipment, Forwarder’s Certificate of Transport, Forwarder’s Cargo Receipt and Mate’s Receipt do not reflect a contract of carriage and are not transport documents as defined in UCP Articles 23 through 29. As such, UCP Article 43 would not apply to these documents. Therefore, these documents will be examined in the same manner as other documents for which there are no specific provisions in the UCP, i.e. under UCP Article 21. In any event, documents must be presented not later than the expiry date of the Credit.
21) Copies of transport documents are not transport documents for the purpose of UCP Articles 23-29 and 43. The UCP Transport Articles apply where there are original transport documents presented. Where a credit allows for the presentation of a copy(ies) rather than an original(s), the credit must explicitly state the details to be shown. Where copies (non-negotiable) are presented, they need not evidence signature, dates, etc.

Expressions not defined in UCP
22) Expressions such as “shipping documents”, “stale documents acceptable”, “third party documents acceptable”, and “exporting country” should not be used as they are not defined in UCP. If used in a credit, their meaning should be made apparent. If not, they have the following meaning under international standard banking practice:
a) “shipping documents” – all documents (not only transport documents), except drafts, required by the credit.
b) “stale documents acceptable” – documents presented later than 21 days after the date of shipment are acceptable as long as they are presented within the validity of the credit.
c) “third party documents acceptable” – all documents, excluding drafts but including invoices, may be issued by a party other than the beneficiary. If the issuing bank’s intent is that the transport document(s) may show a shipper other than the beneficiary, the clause is not necessary because it is already permitted by UCP sub-Article 31(iii).
d) “exporting country” – the country where the beneficiary is domiciled, and/or the country of origin of the goods, and/or the country of receipt by the carrier and/or the country from which shipment or dispatch is made.

23) Words and phrases such as “prompt”, “immediately”, “as soon as possible”, and the like should not be used in any context. If they are used banks will disregard them.

Inconsistency in the documents
24) Documents presented under a credit must not appear to be inconsistent with each other. The requirement is not that the data content be identical, merely that the documents not be inconsistent.

Issuer of documents
25) If a credit indicates that a document is to be issued by a named person or entity, this condition is satisfied if the document appears to be issued by the named person or entity. It may appear to be issued by a named person or entity by use of its letterhead, or, if there is no letterhead, the document appears to have been completed and/or signed by, or on behalf of, the named person or entity.

Language
26) Under international standard banking practice, it is expected that documents issued by the beneficiary will be in the language of the credit. When a credit states that documents in two or more languages are acceptable, a nominated bank may, in its advice of the credit, limit the number of acceptable languages as a condition of its engagement in the credit or confirmation.

Mathematical calculations
27) Detailed mathematical calculations in documents will not be checked by banks. Banks are only obliged to check total values against the credit and other required documents.

Misspellings or typing errors
28) Misspellings or typing errors that do not affect the meaning of a word or the sentence in which it occurs, do not make a document discrepant. For example, a description of the merchandise as “mashine” instead of “machine”, “fountan pen” instead of “fountain pen” or “modle” instead of “model” would not make the document discrepant. However, a description as “model 123” instead of “model 321” would not be regarded as a typing error and would constitute a discrepancy.

Multiple pages and attachments or riders
29) Unless the credit or a document provides otherwise, pages which are physically bound together, sequentially numbered or contain internal cross references, however named or entitled, are to be examined as one document, even if some of the pages are regarded as an attachment. Where a document consists of more than one page, it must be possible to determine that the pages are part of the same document.
30) If a signature and/or endorsement is required to be on a document consisting of more than one page, the signature is normally placed on the first or last page of the document, but unless the credit or the document itself indicates where a signature or endorsement is to appear, the signature or endorsement may appear anywhere on the document.

Originals and copies
31) Documents issued in more than one original may be marked “Original”, “Duplicate”, “Triplicate”, “First Original”, “Second Original”, etc. None of these markings will disqualify a document as an original.
32) Each required document must be presented in at least one original, unless the credit allows for presentation of documents as copies. The number of originals to be presented must be at least the number required by the credit, the UCP, or, where the document itself states how many originals have been issued, the number stated on the document.
33) It can sometimes be difficult to determine from the wording of a credit whether it requires an original or a copy, and to determine whether that requirement is satisfied by an original or a copy.
For example, where the credit requires:
a) “Invoice”, “One Invoice” or “Invoice in 1 copy”, it will be understood to be a requirement for an original invoice.
b) “Invoice in 4 copies”, it will be satisfied by the presentation of at least one original and the remaining number as copies of an invoice.
c) “One copy of Invoice”, it will be satisfied by presentation of a copy of an invoice. However, it is standard banking practice to accept an original instead of a copy in this construction.

34) Where an original would not be accepted in lieu of a copy, the credit must prohibit an original, e.g. “photocopy of invoice – original document not acceptable in lieu of photocopy”, or the like.
35) The ICC Banking Commission Policy Statement, document 470/871(Rev), titled “The determination of an “Original” document in the context of UCP sub-Article 20(b)” is recommended for further guidance on originals versus copies.

Shipping marks
36) The purpose of a shipping mark is to enable identification of a box, bag or package. If a credit specifies the details of a shipping mark, the document(s) mentioning the marks must show these details, but additional information is acceptable provided it is not inconsistent with the credit terms.
37) Shipping marks contained in some documents often include information in excess of what would normally be considered “shipping marks”, and could include information such as the type of goods, warnings as to the handling of fragile goods, net and/or gross weight of the goods, etc. The fact that some documents show such additional information, while others do not, is not a discrepancy.
38) Transport documents covering containerized goods will sometimes only show a container number under the heading “Shipping marks”. Other documents that show a detailed marking will not be considered to be inconsistent for that reason.

Signatures
39) Even if not stated in the credit, drafts, certificates and declarations by their nature require a signature. Transport documents and insurance documents must be signed in accordance with the provisions of the UCP.
40) The fact that a document has a box or space for a signature does not necessarily mean that such box or space must be completed with a signature. For example, banks do not require a signature in the area titled “Signature of shipper or their agent”, or similar phrases, commonly found on transport documents such as air waybills or road transport documents. If a document on its face requires a signature for its validity (e.g. “This document is not valid unless signed”, or similar terms), it must be signed.
41) A signature need not be handwritten. Facsimile signatures, perforated signatures, stamps, symbols (such as chops) or any electronic or mechanical means of authentication are sufficient. However, a photocopy of a signed document does not qualify as a signed original document, nor does a signed document transmitted through a fax-machine, absent an original signature. A requirement for a document to be “signed and stamped”, or a similar requirement, is also fulfilled by a signature and the name of the party typed, or stamped, or handwritten, etc.
42) A signature on a company’s letterhead paper will be taken to be the signature of that company, unless otherwise stated. The company’s name need not be repeated next to the signature.

Title of documents and combined documents
43) Documents may be titled as called for in the credit, bear a similar title, or be untitled. For example, a credit requirement for a “Packing List” may also be satisfied by a document containing packing details whether titled “Packing Note”, “Packing and Weight List”, etc., or an untitled document. The content of a document must appear to fulfill the function of the required document.
44) Documents listed in a credit should be presented as separate documents. If a credit requires a packing list and a weight list, such requirement will be satisfied by presentation of two separate documents, or by presentation of two original copies of a combined packing and weight list, provided such document states both packing and weight details.

DRAFTS AND CALCULATION OF MATURITY DATE

Tenor
45) The tenor must be in accordance with the terms of the credit.
a) If a draft is drawn at a tenor other than sight, or other than a certain period after sight, it must be possible to establish the maturity date from the data in the draft itself.
b) As an example of where it is possible to establish a maturity date from the data in the draft, if a credit calls for drafts at a tenor 60 days after the bill of lading date, where the date of the bill of lading is 12 May 2002, the tenor could be indicated on the draft in one of the following ways:
i. “60 days after bill of lading date 12 May 2002”, or
ii. “60 days after 12 May 2002”, or
iii. “60 days after bill of lading date” and elsewhere on the face of the draft state “bill of lading date 12 May 2002”, or
iv. “60 days date” on a draft dated the same day as the date of the bill of lading,or
v. “11 July 2002”, i.e. 60 days after the bill of lading date.
c) If the tenor refers to xxx days after the bill of lading date, the on board date is deemed to be the bill of lading date even if the on board date is prior to or later than the date of issuance of the bill of lading.
d) The UCP provides no guidance where the words “from” and “after” are used to determine maturity dates of drafts. Reference to “from” and “after” in the UCP refers solely to date terminology for periods of shipment. Where the word “from” is used to establish the maturity date, international standard banking practice would exclude the date mentioned, unless the credit specifically provides that “from” is considered to include the date mentioned. Therefore, for the purposes of determining the maturity date of a time draft, the words “from” and “after” have the same effect. Calculation of the maturity commences the day following the date of the document, shipment, or other event, i.e. 10 days after or from March 1 is March 11.
e) If a bill of lading showing more than one on board notation is presented under a credit which requires drafts to be drawn, for example, at 60 days after or from bill of lading date, and the goods according to both or all on board notations were shipped from ports within a permitted geographical area or region, the earliest of these on board dates will be used for calculation of the maturity date. Example: the credit requires shipment from European port and the bill of lading evidences on board vessel “A” from Dublin August 16, and on board vessel “B” from Rotterdam August 18. The draft should reflect 60 days from the earliest on board date in a European port, i.e. August 16.
f) If a credit requires drafts to be drawn, for example, at 60 days after or from bill of lading date, and more than one set of bills of lading are presented under one draft, the date of the last bill of lading will be used for the calculation of the maturity date.

46) While the examples refer to bill of lading dates, the same principles apply to all transport documents.
Maturity date
47) If a draft states a maturity date by using an actual date, the date must have been calculated in accordance with the requirements of the credit.
48) For drafts drawn “at XXX days sight”, the maturity date is established as follows:
a) in the case of complying documents, or in the case of non-complying documents where the drawee bank has not provided a refusal of documents, the maturity date will be XXX days after the date of receipt of documents by the drawee bank.
b) in the case of non-complying documents where the drawee bank has provided a notice of refusal of documents and subsequent approval, at the latest XXX days after the date of acceptance of the draft by the drawee bank. The date of acceptance of the draft must be no later than the date of approval of the documents.

49) In all cases the drawee bank must advise the maturity date to the presenter. The calculation of tenor and maturity dates, as shown above, would also apply to credits designated as being available by deferred payment, i.e. where there is no requirement for a draft to be presented by the beneficiary.

Banking days, grace days, delays in remittance
50) Payment must be available in immediately available funds on the due date at the place where the draft or documents are payable, provided such due date is a banking day in that place. If the due date is a non-banking day, payment will be due on the first banking day following the due date unless the credit states otherwise. Delays in the remittance of funds, such as grace days, the time it takes to remit funds, etc., must not be in addition to the stated or agreed due date as defined by the draft or documents.

Endorsement
51) The draft must be endorsed, if necessary.

Amounts
52) The amount in words must accurately reflect the amount in figures if both are shown, and indicate the currency, as stated in the credit.
53) The amount must agree with that of the invoice, unless otherwise stated in the credit or as a result of UCP sub-Article 37(b).

How the draft is drawn
54) The draft must be drawn on the party stated in the credit.
55) The draft must be drawn by the beneficiary.

Drafts on the applicant
56) Credits should not be issued requiring that drafts be drawn on the applicant. If a credit calls for drafts to be drawn on the applicant, banks must consider such drafts as additional documents to be reviewed in accordance with UCP Article 21.

Corrections and alterations
57) Corrections and alterations on a draft, if any, must appear to have been authenticated by the drawer.
58) In some countries draft(s) showing corrections and alterations are not acceptable even with the drawer’s authentication. Issuing banks in such countries should make a statement in the credit to the effect that no correction or alteration must appear in the draft(s).

INVOICES

Definition of invoice
59) A credit requiring an “invoice” without further definition will be satisfied by any type of invoice presented (commercial invoice, customs invoice, tax invoice, final invoice, consular invoice, etc.). However, invoices identified as “provisional”, “pro-forma”, or the like are not acceptable unless specifically authorized in the credit. When a credit requires presentation of a commercial invoice, a document titled “invoice” will be acceptable.

Name and address
60) An invoice must appear on its face to have been issued by the beneficiary named in the credit. Telex or fax numbers, etc., forming part of the address, need not be present, or, if stated, need not be identical to that in the credit.
61) An invoice must be made out in the name of the applicant. Telex or fax numbers, etc., forming part of the address, need not be present, or, if stated, need not be identical to that in the credit.

Description of the goods and other general issues related to invoices
62) The description of the goods in the invoice must correspond with the description in the credit. There is no requirement for a mirror image. For example, details of the goods may be stated in a number of areas within the invoice which, when collated together, represents a description of the goods corresponding to that in the credit.
63) The goods description in an invoice must reflect what goods have been actually shipped. For example, where there are two types of goods shown in the credit, such as 10 trucks and 5 tractors, an invoice that reflects only shipment of 4 trucks would be acceptable provided the credit does not prohibit partial shipment. An invoice showing the entire goods description as stated in the credit, then stating what has actually been shipped, is also acceptable.
64) An invoice must evidence the value of the goods shipped. Unit price(s), if any, and currency shown in the invoice must agree with that shown in the credit. The invoice must show any discounts or deductions required in the credit. The invoice may also show a deduction covering advance payment, discount, etc., not stated in the credit.
65) If a trade term is part of the goods description in the credit, or stated in connection with the amount, the invoice must state the trade term specified, and if the description provides the source of the trade term, the same source must be identified (e.g. a credit term “CIF Singapore Incoterms 2000” would not be satisfied by “CIF Singapore Incoterms”, etc.). Charges and costs must be included within the value shown against the stated trade term in the credit and invoice. Any charges and costs shown beyond this value are not allowed.
66) Unless required by the credit, an invoice need not be signed or dated.
67) The quantity of merchandise, weights, and measurements shown on the invoice must be not inconsistent with the same quantities appearing on other documents.
68) An invoice must not show:
a) over-shipment (except as provided in UCP sub-Article 39(b)), or
b) merchandise not called for in the credit (including samples, advertising materials, etc.) even if stated to be free of charge.

69) The quantity of the goods required in the credit may vary within a tolerance of +/- 5%. This does not apply if a credit stipulates that the quantity must not be exceeded or reduced, or if a credit stipulates the quantity in terms of a stated number of packing units or individual items. A variance of up to +5% in the goods quantity does not allow the amount of the drawing to exceed the amount of the credit.
70) If partial shipments are prohibited, a tolerance of 5% less in the invoice amount is acceptable, provided that the quantity is shipped in full and that any unit price, if stated in the credit, has not been reduced. If no quantity is stated in the credit the invoice will be considered to cover the full quantity.
71) The required number of originals and copies must be presented.
72) If a credit calls for instalment shipments, each shipment must be in accordance with the instalment schedule.

OCEAN/MARINE BILLS OF LADING
(COVERING PORT-TO-PORT SHIPMENT)

Application of UCP Article 23
73) If a credit requires presentation of a transport document covering a port-to-port shipment, UCP Article 23 is applicable.
74) If a credit requires presentation of a “marine” or “ocean” transport document, UCP Article 23 applies. A transport document need not use the term “marine” or “ocean” in order to comply with UCP Article 23 provided that it covers a port-to-port shipment.

Full set of originals
75) A UCP Article 23 transport document must indicate the number of originals that have been issued. Transport documents marked “First Original”, “Second Original”, “Third Original”, “Original”, “Duplicate”, “Triplicate”, etc., or similar expressions are all originals. Bills of lading need not be marked “original” to be acceptable as an original bill of lading. See section 3.1 of ICC Publication 470/871Rev., 29 July 1999, “The determination of an “Original” document in the context of UCP 500 sub-Article 20(b)”.

Signing of bills of lading
76) Original bills of lading must bear a signature in the form described in UCP sub-Article 20(b) and the name of the carrier must appear on the face of the bill of lading, identified as the carrier.
a) If an agent signs a bill of lading on behalf of a carrier, the agent must be identified as agent, and must identify the carrier on whose behalf it is signing, unless the carrier has been identified elsewhere on the face of the bill of lading.
b) If the master (captain) signs the bill of lading, the signature of the master (captain) must be identified as “master” (“captain”). In this event, the name of the master (captain) need not be stated.
c) If an agent signs the bill of lading on behalf of the master (captain), the agent must be identified as agent and the name of the master (captain) on whose behalf it is signing must be stated.

77) If a credit states “Freight Forwarder’s Bill of Lading is acceptable” or uses a similar phrase, then the bill of lading may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as carrier or agent for the named carrier. It is not necessary to show the name of the carrier.

On board notations
78) If a pre-printed “Shipped on board” bill of lading is presented, its issuance date will be deemed to be the date of shipment unless it bears a separate dated on board notation, in which event the date of the on board notation will be deemed to be the date of shipment whether or not the on board date is before or after the issuance date of the bill of lading.
79) “Shipped in apparent good order”, “Laden on board”, “clean on board” or other phrases incorporating words such as “shipped” or “on board” have the same effect as “Shipped on board”.

Ports of loading and ports of discharge
80) While the named port of loading, as required by the credit, should appear in the port of loading field within the bill of lading, it may instead be stated in the field headed “Place of receipt” or the like, if it is clear that the goods were transported from that place of receipt by vessel, and provided there is an on board notation evidencing that the goods were loaded on that vessel at the port stated under “Place of receipt” or like term.
81) While the named port of discharge, as required by the credit, should appear in the port of discharge field within the bill of lading, it may be stated in the field headed “Place of final destination” or the like if it is clear that the goods were to be transported to that place of final destination by vessel, and provided there is a notation evidencing that the port of discharge is that stated under “Place of final destination” or like term.
82) If a Container Yard (CY) or Container Freight Station (CFS) is stated as the place of receipt and that place is the same as the stated port of loading (e.g. Place of Receipt: Hong Kong CY; Port of Loading: Hong Kong), these places are deemed to be the same, and therefore the specification of the port of loading and the name of the vessel in the “on board” notation are not necessary.
83) If a credit gives a geographical area or range of ports of loading and/or discharge (e.g. “Any European Port”), the bill of lading must indicate the actual port of loading and/or discharge, which must be within the geographical area or range quoted.

Consignee, order party, shipper and endorsement, notify party
84) If a credit requires a bill of lading to show that the goods are consigned to a named party, e.g. “consigned to Bank X” (a “straight” consignment), rather than “to order” or “to order of Bank X“, the bill of lading must not contain words such as “to order” or “to order of” that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned “to order” or “to order of” a named party, the bill of lading must not show the goods are consigned straight to the named party.
85) If a bill of lading is issued to order, or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
86) If a credit does not state a notify party(ies), the respective field on the bill of lading may be left blank or completed in any manner.

Transhipment and partial shipment
87) Transhipment is the unloading and reloading of goods from one vessel to another during the course of ocean carriage from the port of loading to the port of discharge stipulated in the credit. If it does not occur between these two ports, unloading and reloading is not considered to be transhipment.
88) Although transhipment may be prohibited, UCP sub-Article 23(d) nonetheless permits transhipment under certain circumstances. If, however, a credit prohibits transhipment and excludes UCP sub-Articles 23(d)(i) and (ii), a bill of lading that indicates on its face that transhipment will or may take place will be considered discrepant.
89) If a credit prohibits partial shipments, and more than one set of original bills of lading are presented covering shipment from one or more ports of loading (as specifically allowed, or within a given range, in the credit), such documents are acceptable provided that they cover the shipment of goods on the same vessel and same journey and are destined for the same port of discharge. In the event that more than one set of bills of lading are presented, and incorporate different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and must fall on or before the latest shipment date specified in the credit. Shipment on more than one vessel is a partial shipment, even if the vessels leave on the same day for the same destination.

Clean bills of lading
90) Clauses or notations on bills of lading which expressly declare a defective condition of the goods and/or packaging are not acceptable. Clauses or notations which do not expressly declare a defective condition of the goods and/or packaging (e.g. “packaging may not be sufficient for the sea journey”) do not constitute a discrepancy. A statement that the packaging “is not sufficient for the sea journey” would not be acceptable.
91) The word “clean” need not appear on a bill of lading even though the credit may require a “clean on board bill of lading” or one marked “clean on board”.
92) If the word “clean” appears on a bill of lading and has been deleted, the bill of lading will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods description
93) A goods description in the bill of lading may be shown in general terms not inconsistent with that stated in the credit.

Corrections and alterations
94) Corrections and alterations on a bill of lading must be authenticated. Such authentication must appear to have been made by the carrier, master (captain), or any of their agents (who may be different from the agent that may have issued or signed it), provided they are identified as an agent of the carrier or the master (captain).
95) Non-negotiable copies of bills of lading do not need to include any signature or authentication to any alterations or corrections that may have been made on the original.

Freight and additional costs
96) If a credit requires that a bill of lading show that freight has been paid or is payable at destination, the bill of lading must be marked accordingly.
97) Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
98) If a credit states that costs additional to freight are not acceptable, a bill of lading must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded, e.g. costs covering the late return of containers, is not considered to be an indication of additional costs in this context.

Goods covered by more than one bill of lading
99) If a bill of lading states that the goods in a container are covered by that bill of lading plus one or more other bills of lading, and the bill of lading states that all bills of lading must be surrendered, or words of similar effect, this means that all bills of lading related to that container must be presented in order for the container to be released. Such a bill of lading is not acceptable unless all the bills of lading form part of the same presentation under the same credit.

CHARTER PARTY BILLS OF LADING

Application of UCP Article 25
100) If a credit requires presentation of a charter party bill of lading covering a port-to-port shipment, UCP Article 25 is applicable. A transport document containing any indication that it is subject to a charter party is a charter party bill of lading under UCP Article 25.
101) If a credit requires presentation of a charter party bill of lading, then a marine transport document presented containing an indication that it is subject to a charter party must fulfill the requirements of UCP Article 25.

Full set of originals
102) A UCP Article 25 transport document must indicate the number of originals that have been issued. Transport documents marked “First Original”, “Second Original”, “Third Original”, “Original”, “Duplicate”, “Triplicate”, etc., or similar expressions are all originals. Charter party bills of lading need not be marked “original” to be acceptable under a credit. See section 3.1 of ICC Publication 470/871 Rev. 29, July 1999, “The determination of an ‘Original’ document in the context of UCP 500 sub-Article 20(b)”.

Signing of charter party bills of lading
103) Original charter party bills of lading must bear a signature in the form described in UCP sub-Article 20(b).
a) If the master (captain) or owner signs the charter party bill of lading, the signature of the master (captain) or owner must be identified as “master” (“captain”) or “owner”.
b) If an agent signs the charter party bill of lading on behalf of the master (captain) or owner, the agent must be identified as agent and the name of the master (captain) or owner on whose behalf it is signing is required to be stated.

On board notations
104) If a pre-printed “Shipped on board” charter party bill of lading is presented, its issuance date will be deemed to be the date of shipment unless it bears an on board notation, in which event the date of the on board notation will be deemed to be the date of shipment whether or not the on board date is before or after the issuance date of the document.
105) “Shipped in apparent good order”, “Laden on board”, “clean on board” or other phrases incorporating words such as “shipped” or “on board” have the same effect as “shipped on board”.

Ports of loading and ports of discharge
106) If a credit gives a geographical area or range of ports of loading and/or discharge (e.g. “Any European Port”), the charter party bill of lading must indicate the actual port(s) of loading, which must be within the geographical area or range indicated but may show the geographical area or range of ports as the port of discharge.

Consignee, order party, shipper and endorsement, notify party
107) If a credit requires a charter party bill of lading be consigned to a named party (e.g. “consigned to Bank X”, rather than “to order” or “to order of Bank X”) (a “straight” consignment), the charter party bill of lading must not contain words such as “to order” or “to order of” that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires a charter party bill of lading to be consigned “to order” or “to order of” a named party, the bill of lading must not be consigned straight to the named party.
108) If a charter party bill of lading is issued to order, or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
109) If a credit does not state a notify party(ies), the respective field on the charter party bill of lading may be left blank or completed in any manner.

Partial shipment
110) If a credit prohibits partial shipments, and more than one set of original charter party bills of lading are presented covering shipment from one or more ports of loading (as specifically allowed, or within a given range, in the credit), such documents are acceptable, provided that they cover the shipment of goods on the same vessel and same journey and are destined for the same port of discharge, range of ports or geographical area. In the event that more than one set of charter party bills of lading are presented, and incorporate different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and must fall on or before the latest shipment date specified in the credit. Shipment on more than one vessel is a partial shipment, even if the vessels leave on the same day for the same destination.

Clean charter party bills of lading
111) Clauses or notations on charter party bills of lading, which expressly declare a defective condition of the goods and/or packaging are not acceptable. Clauses or notations that do not expressly declare a defective condition of the goods and/or packaging (e.g. “packaging may not be sufficient for the sea journey”) do not constitute a discrepancy. A statement that the packaging “is not sufficient for the sea journey” would not be acceptable.
112) The word “clean” need not appear on a charter party bill of lading even though the credit may require a “clean on board charter party bill of lading” or one marked “clean on board”.
113) If the word “clean” appears on a charter party bill of lading and is deleted, the charter party bill of lading will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods description
114) A goods description in charter party bills of lading may be shown in general terms not inconsistent with that stated in the credit.

Corrections and Alterations
115) Corrections and alterations on charter party bills of lading must be authenticated. Such authentication must appear to have been made by the owner, master (captain), or any of their agents (who may be different from the agent that may have issued or signed it), provided they are identified as an agent of the owner or the master (captain).
116) Non-negotiable copies of charter party bills of lading do not need to include any signature on, or authentication for any alterations or corrections that may have been made on the original.

Freight and additional costs
117) If a credit requires that a charter party bill of lading show that freight has been paid or is payable at destination, the charter party bill of lading must be marked accordingly.
118) Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
119) If a credit states that costs additional to freight are not acceptable, a charter party bill of lading must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods, or after the goods have been unloaded, is not considered to be an indication of additional costs in this context.

MULTIMODAL TRANSPORT DOCUMENTS

Application of UCP Article 26
120) If a credit requires presentation of a transport document covering transportation utilizing at least two modes of transport, and if the transport document clearly shows that it covers a shipment from the place of taking in charge and/or port, airport or place of loading to the place of final destination mentioned in the credit, UCP Article 26 is applicable. In such circumstances, a multimodal transport document must not indicate that shipment or dispatch has been effected by only one mode of transport, but it may be silent regarding the modes of transport utilized.
121) In all places where the term multimodal transport document is used within this document, it also includes the term combined transport document. A document need not be titled “Multimodal transport document” or “Combined transport document” to be acceptable under UCP Article 26, even if such expressions are used in the credit.

Full set of originals
122) A UCP Article 26 transport document must indicate the number of originals that have been issued. Transport documents marked “First Original”, “Second Original”, “Third Original”, “Original”, “Duplicate”, “Triplicate”, etc., or similar expressions are all originals. Multimodal transport documents need not be marked “original” to be acceptable under a credit. See ICC Banking Commission Decision on Original Documents (section 3.1) dated 12 July 1999.

Signing of multimodal transport documents

123) Original multimodal transport documents must bear a signature in the form described in UCP sub-Article 20(b) and the name of the carrier or multimodal transport operator must appear on the face of the multimodal transport document, identified as the carrier or multimodal transport operator.
a) If an agent signs a multimodal transport document, on behalf of the carrier or multimodal transport operator, the agent must be identified as agent, and must identify on whose behalf it is signing, unless the carrier or multimodal transport operator has been identified elsewhere on the face of the multimodal transport document.
b) If the master (captain) signs the multimodal transport document, the signature of the master (captain) must be identified as “master” (“captain”). In this event, the name of the master (captain) need not be stated.
c) If an agent signs the multimodal transport document, on behalf of the master (captain), the agent must be identified as agent and the name of the master (captain) on whose behalf it is signing must be stated.

124) If a credit states “Freight Forwarder’s Multimodal transport document is acceptable” or uses a similar phrase, then the multimodal transport document may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as carrier or multimodal transport operator or their agent. It is not necessary to show the name of the carrier or multimodal transport operator.

On board notations

125) The issuance date of a multimodal transport document will be deemed to be the date of dispatch, taking in charge or loading on board unless it bears a separate dated notation evidencing dispatch, taking in charge or loading on board from the location required by the credit, in which event the date of the notation will be deemed to be the date of shipment whether or not the date is before or after the issuance date of the document.
126) “Shipped in apparent good order”, “Laden on board”, “clean on board” or other phrases incorporating words such as “shipped” or “on board” have the same effect as “Shipped on board”.

Place of taking in charge, dispatch, loading on board and destination
127) If a credit gives a geographical range for the place of taking in charge, dispatch, loading on board and destination (e.g. “Any European Port”), the multimodal transport document must indicate the actual place of taking in charge, dispatch, loading on board and destination, which must be within the geographical area or range quoted.

Consignee, order party, shipper and endorsement, notify party
128) If a credit requires that a multimodal transport document to show that the goods are consigned to a named party, e.g. “consigned to Bank X” (a “straight” consignment), rather than “to order” or “to order of Bank X”, the multimodal transport document must not contain words such as “to order” and “to order of” that precede the name of that named party, whether typed or pre-printed. Likewise, if a credit requires the goods to be consigned “to order” or “to order of” a named party, the multimodal transport document must not show the goods are consigned straight to the named party.
129) If a multimodal transport document is issued to order, or to order of the shipper, it must be endorsed by the shipper. An endorsement indicating that it is made for or on behalf of the shipper is acceptable.
130) If a credit does not stipulate a notify party(ies), the respective field on the multimodal transport document may be left blank or completed in any manner.

Transhipment and partial shipment
131) In a multimodal transport shipment, transhipment will occur, i.e. the unloading and reloading of goods from one mode of transport to another during the course of the journey from the point of taking in charge, dispatch or loading on board, to the final destination stipulated in the credit. Should transhipment be prohibited, banks will accept a multimodal transport document evidencing that transhipment has occurred provided the entire journey is covered by one and the same multimodal transport document
132) If a credit prohibits partial shipments and more than one set of original multimodal transport documents are presented covering shipment, dispatch or taking in charge from one or more points of origin (as specifically allowed or within a given range in the credit), such documents are acceptable provided that they cover the movement of goods on the same means of conveyance and same journey and are destined for the same destination. In the event that more than one set of multimodal transport documents are presented, and if they incorporate different dates of shipment, dispatch or taking in charge, the latest of these dates will be taken for the calculation of any presentation period, and such date must fall on or before any latest date of shipment, dispatch or taking in charge specified in the credit.
133) Shipment on more than one means of conveyance (more than one truck (lorry), vessel, aircraft, etc.) is a partial shipment, even if such means of conveyance leave on the same day for the same destination.

Clean multimodal transport documents
134) Clauses or notations on multimodal transport documents that expressly declare a defective condition of the goods and/or packaging are not acceptable. Clauses or notations that do not expressly declare a defective condition of the goods and/or packaging (e.g. “packaging may not be sufficient for the journey”) do not constitute a discrepancy. A statement that the packaging “is not sufficient for the journey” would not be acceptable.
135) The word “clean” need not appear on a multimodal transport document even though the credit may require a “clean on board multimodal transport document” or one marked “clean on board”.
136) If the word “clean” appears on a multimodal transport document and has been deleted, the multimodal transport document will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods description
137) A goods description in the multimodal transport document may be shown in general terms not inconsistent with that stated in the credit.

Corrections and alterations
138) Corrections and alterations on a multimodal transport document must be authenticated. Such authentication must appear to have been made by the carrier, master (captain), multimodal transport operator, or any one of their agents who may be different from the agent that may have issued or signed it, provided they are identified as an agent of the carrier, master (captain) or multimodal transport operator.
139) Copies of multimodal transport documents do not need to include any signature on, or authentication of any alterations or corrections that may have been made on the original.

Freight and additional costs
140) If a credit requires that a multimodal transport document show that freight has been paid or is payable at destination, the multimodal transport document must be marked accordingly.
141) Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
142) If a credit states that costs additional to freight are not acceptable, a multimodal transport document must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms which refer to costs associated with the loading or unloading of goods, such as Free In (FI), Free Out (FO), Free In and Out (FIO) and Free In and Out Stowed (FIOS). A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded is not considered to be an indication of additional costs in this context.

Goods covered by more than one multimodal transport document
143) If a multimodal transport document states that the goods in a container are covered by that multimodal transport document plus one or more other multimodal transport documents, and the document states that all multimodal transport documents must be surrendered, or words of similar effect, this means that all multimodal transport documents related to that container must be presented in order for the container to be released. Such a multimodal transport document is not acceptable unless all the multimodal transport documents form part of the same presentation under the same credit.

AIR TRANSPORT DOCUMENTS

Application of UCP Article 27
144) If a credit requires presentation of a transport document covering an airport-to-airport shipment, UCP Article 27 is applicable.
145) If a credit required presentation of an “air waybill” or “air consignment note” or similar, UCP Article 27 applies. An air transport document need not use these terms in order to comply with UCP Article 27 provided that it covers an airport-to-airport shipment.
Original air transport documents
146) The air transport document must appear, from the face of the document, to be the “Original for Consignor/Shipper”. A requirement for a full set of originals is satisfied by the presentation of a document indicating that it is the original for consignor/shipper.

Signing of air transport documents
147) An original air transport document must bear a signature in the form described in UCP sub-Article 20(b) and the name of the carrier must appear on the face of the air transport document, identified as the carrier. If an agent signs an air transport document on behalf of a carrier, the agent must be identified as agent, and must identify the carrier on whose behalf it is signing, unless the carrier has been identified elsewhere on the face of the air transport document.
148) If a credit states “House air waybill is acceptable” or “Freight Forwarder’s air waybill is acceptable” or uses a similar phrase, then the air transport document may be signed by a freight forwarder in the capacity of a freight forwarder, without the need to identify itself as a carrier or agent for a named carrier. It is not necessary to show the name of the carrier.

Goods accepted for carriage, date of shipment, and requirement for an actual date of dispatch
149) An air transport document must indicate that the goods have been accepted for carriage.
150) If a credit indicates that an actual date of dispatch must appear on the air transport document, the document must contain a separate notation that provides this information. This date of dispatch will be considered as the date of shipment. Information contained in the boxes typically titled “For Carrier Use Only” will not be considered for determining the actual date of dispatch.
151) If no actual date of dispatch is required by the credit to be shown on the document, the date of issuance of an air transport document will be deemed to be the date of dispatch, even if the document shows a flight date and/or a flight number in the box marked “For Carrier Use Only” or similar expression. If the actual flight date is shown as a separate notation, but is not required by the credit, it will be disregarded in determining the date of shipment.

Airports of departure and destination
152) Air transport documents must indicate the airport of departure and airport of destination as stated in the credit. The identification of airports by the use of IATA codes instead of writing out the name in full (e.g. LHR instead of London Heathrow) is not a discrepancy.
153) If a credit gives a geographical area or range of airports of departure and/or destination (e.g. ”Any European Airport”), the air transport document must indicate the actual airport of departure and/or destination, which must be within that geographical area or range quoted.

Consignee, order party and notify party
154) Air transport documents should not be issued “to order” or “to order of” a named party because they are not documents of title. Even if a credit calls for an air transport document made out “to order” or “to order of” a named party, a document presented showing goods consigned to that party, without mention of “to order” or “to order of”, is acceptable.
155) If a credit does not state a notify party(ies), the respective field on the air transport document may be left blank or completed in any manner.

Transhipment and partial shipment

156) Transhipment is the unloading and reloading of goods from one aircraft to another during the course of carriage from the airport of departure to the airport of destination stipulated in the credit. If it does not occur between these two airports, unloading and reloading is not considered to be transhipment.
157) Although transhipment may be prohibited, UCP sub-Article 27(c) nonetheless permits transhipment provided the entire carriage is covered by one and the same air transport document.
158) If a credit prohibits partial shipments, and more than one air transport document is presented covering dispatch from one or more airports of departure (as specifically allowed, or within a given range, in the credit), such documents are acceptable, provided that they cover the dispatch of goods on the same aircraft and same flight, and are destined for the same airport of destination. In the event that more than one air transport document is presented incorporating different dates of shipment, the latest of these dates of shipment will be taken for the calculation of any presentation period and such date must fall on or before the latest shipment date specified in the credit.
159) Shipment on more than one aircraft is a partial shipment, even if the aircraft leave on the same day for the same destination.

Clean air transport documents
160) Clauses or notations on an air transport document which expressly declare a defective condition of the goods, and/or packaging are not acceptable. Clauses or notations on the air transport document which do not expressly declare a defective condition of the goods and/or packaging (e.g. “packaging may not be sufficient for the air journey”) do not constitute a discrepancy. Statements that the packaging “is not sufficient for the air journey” would not be acceptable.
161) The word “clean” need not appear on the air transport document even though the credit may require a “clean air waybill” or one marked “clean on board”.
162) If the word “clean” appears on an air transport document and has been deleted, the air transport document will not be deemed to be claused or unclean unless it specifically bears a clause or notation declaring that the goods or packaging are defective.

Goods description
163) A goods description in an air transport document may be shown in general terms not inconsistent with that stated in the credit.

Corrections and alterations
164) Corrections and alterations on air transport documents must be authenticated. Such authentication must appear to have been made by the carrier or any of its agents (who may be different from the agent that may have issued or signed it), provided it is identified as an agent of the carrier.
165) Copies of air transport documents do not need to include any signature of the carrier or agent (or shipper even if required by the credit to appear on the original air transport document), nor any authentication of any alterations or corrections that may have been made on the original.

Freight and additional costs
166) If a credit requires that an air transport document show that freight has been paid or is payable at destination, the air transport document must be marked accordingly.
167) Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.
168) If a credit states that costs additional to freight are not acceptable, an air transport document must not indicate that costs additional to the freight have been or will be incurred. Such indication may be by express reference to additional costs or by the use of shipment terms that refer to costs associated with the loading or unloading of goods. A reference in the transport document to costs which may be levied as a result of a delay in unloading the goods or after the goods have been unloaded is not considered an indication of additional costs in this context.
169) Air transport documents often have separate boxes which, by their pre-printed headings, indicate that they are for freight charges “prepaid” and for freight charges “to collect”, respectively. A requirement in a credit for an air transport document to show that freight has been prepaid will be fulfilled by a statement of the freight charges under the heading “Freight Prepaid”, or a similar expression or indication, and a requirement that an air transport document show that freight has to be collected will be fulfilled by a statement of the freight charges under the heading “Freight to Collect”, or a similar expression or indication.

ROAD, RAIL OR INLAND WATERWAY TRANSPORT DOCUMENTS

Application of UCP Article 28
170) If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP Article 28 is applicable.

Original and duplicate of road, rail or inland waterway transport documents
171) If a credit requires a road, rail or inland waterway transport document, the transport document presented will be accepted as an original whether or not it is marked as an original. A road transport document must show that it is the copy meant for the shipper or consignor or bear no marking indicating for whom the document has been prepared. With respect to rail waybills, the practice of many railway companies is to provide the shipper or consignor with only a duplicate (often a carbon copy) duly authenticated by the railway company’s stamp. Such a duplicate will be accepted as an original.

Carrier and signing of road, rail or inland waterway transport documents
172) The term “carrier” need not appear at the signature line provided the transport document appears to be signed by the carrier, or an agent on behalf of the carrier, if the carrier is otherwise identified as the “carrier” on the face of the transport document. International standard banking practice is to accept a railway bill evidencing date stamp by the railway station of departure without showing the name of the carrier or a named agent signing for or on behalf of the carrier. (UCP sub-Article 28(a)(i).
173) The term “carrier” used in UCP Article 28 includes terms in transport documents such as “issuing carrier”, “actual carrier”, “succeeding carrier”, and “contracting carrier”.
174) Any signature, authentication, reception stamp, or other indication of receipt on the transport document must appear to be made either by:
a) the carrier, identified as the carrier, or
b) a named agent signing for or on behalf of the carrier, and indicating the name and capacity of the carrier on whose behalf that agent is signing.

Order party and notify party
175) Transport documents which are not documents of title should not be issued “to order” or “to order of” a named party. Even if a credit calls for a transport document which is not a document of title to be made out “to order” or “to order of” a named party, such a document, showing goods consigned to that party, without mention of “to order” or “to order of”, is acceptable.
176) If a credit does not stipulate a notify party(ies), the respective field on the transport document may be left blank or completed in any manner.

Partial shipment
177) Shipment on more than one means of conveyance (more than one truck (lorry), train, vessel, etc.) is a partial shipment, even if such means of conveyance leave on the same day for the same destination.

Goods description
178) A goods description in the transport document may be shown in general terms not inconsistent with that stated in the credit.

Corrections and alterations
179) Corrections and alterations on an UCP Article 28 transport document must be authenticated. Such authentication must appear to have been made by the carrier, or any one of their named agents, who may be different from the agent that may have issued or signed it, provided they are identified as an agent of the carrier.
180) Copies of UCP Article 28 transport documents do not need to include any signature on, or authentication of any alterations or corrections that may have been made on the original.

Freight and additional costs
181) If a credit requires that a UCP Article 28 transport document show that freight has been paid or is payable at destination, the transport document must be marked accordingly.
182) Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.

INSURANCE DOCUMENTS

Application of UCP Articles 34-36
183) If a credit requires presentation of an insurance document, UCP Articles 34 through 36 are applicable.

Issuers of insurance documents
184) Insurance documents must appear on their face to have been issued and signed by insurance companies or underwriters or their agents. If required on the face of the insurance document or in accordance with the credit terms, all originals must appear to have been countersigned.
185) An insurance document is acceptable if issued on an insurance broker’s stationery, provided the insurance document has been signed by the insurance company or its agent, or by the underwriter or its agent. A broker may sign as agent for the named insurance company or the named underwriter.

Risks to be covered
186) The insurance document must cover the risks defined in the credit. If a credit is explicit with regard to risks to be covered, there must be no exclusions referenced in the document with respect to those risks. If a credit requires “all risks” coverage, this is satisfied by the presentation of an insurance document evidencing any “all risks” clause or notation, even if it is stated that certain risks are excluded. An insurance document indicating that it covers Institute Cargo Clauses (A) satisfies a condition in a credit calling for an “all risks” clause or notation.
187) Insurance covering the same risk for the same shipment must be covered under one document unless the insurance documents for partial cover each clearly reflect, by percentage or otherwise, the value of each insurer’s cover and that each insurer will bear their share of the liability severally and without pre-conditions relating to any other insurance cover that may have been effected for that shipment. An insurance document that clearly reflects, by percentage or otherwise, the share of liability that each insurer will bear is acceptable provided joint liability is declared, or the leading insurer states that it bears 100% of the covered risk.
188) The insurance document must show that risks are covered at least between the point of shipment, dispatch or taking in charge and the point of discharge or final destination as required by the credit.

Dates
189) Insurance documents must not bear a date of issuance which is later than the date of loading on board or dispatch or taking in charge of the goods (as applicable) at the place stated in the credit, unless it appears from the insurance document that thethat the cover is effective at the latest from the date of loading on board or dispatch or taking in charge (as applicable) of the goods at the place stated in the credit.
190) An insurance document that incorporates an expiry date must clearly indicate that such expiry date relates to the latest date that loading on board or dispatch or taking in charge of the goods (as applicable) is to occur, as opposed to an expiry date for the presentation of any claims thereunder.

Currency and amount
191) An insurance document must be issued in the currency of and, as a minimum, for the amount required by the credit. If a credit does not state a minimum percentage amount, then the minimum insurance amount must be 110% of the CIF value, or 110% of CIP value, as determined by the amounts reflected on the invoice or any other required document. A requirement for “Insurance for 110%”, or the like, is deemed to be the minimum amount of insurance coverage required. The UCP does not provide for any maximum percentage.
192) If a credit requires the insurance cover to be irrespective of percentage, the insurance document must not contain a clause stating that the insurance cover is subject to a franchise or an excess deductible.
193) If it is apparent from the credit or from the documents that the final invoice amount only represents a certain part of the gross value of the goods (e.g. due to discounts, pre-payments or the like, or because part of the value of the goods is to be paid at a later date), the calculation of insurance cover must be based on the full gross value of the goods.

Insured party and endorsement
194) An insurance document must be in the form as required by the credit and, where necessary, be endorsed by the party to whose order claims are payable. A document issued to bearer is acceptable where the credit requires an insurance document endorsed in blank and vice versa.
195) If a credit is silent as to the insured party, an insurance document evidencing that claims are payable to the order of the shipper or beneficiary would not be acceptable unless endorsed. An insurance document should be issued or endorsed so that the right to receive payment under it passes upon, or prior to, the release of the documents.

CERTIFICATES OF ORIGIN

Basic requirement
196) A requirement for a certificate of origin will be satisfied by the presentation of a signed, dated document that certifies to the origin of the goods.

Issuers of certificates of origin
197) A certificate of origin must be issued by the party stated in the credit. However, if a credit requires a certificate of origin to be issued by the beneficiary, the exporter or the manufacturer, a document issued by a chamber of commerce will be deemed acceptable provided it clearly identifies the beneficiary, the exporter or the manufacturer as the case may be. If a credit does not state who is to issue the certificate, then a document issued by any party, including the beneficiary, is acceptable.

Contents of certificates of origin
198) The certificate of origin must appear to relate to the invoiced goods. The goods description in the certificate of origin may be shown in general terms not inconsistent with that stated in the credit or by any other reference indicating a relation to the goods in a required document.
199) Consignee information, if shown, must not be inconsistent with the consignee information in the transport document. However, if a credit requires a transport document to be issued “to order”, “to the order of shipper”, “to order of the issuing bank”, or “consigned to the issuing bank”, the certificate of origin may show the applicant of the credit, or another party named therein, as consignee. If a credit has been transferred, the name of the first beneficiary as consignee would also be acceptable.
200) The certificate of origin may show the consignor or exporter as a party other than the beneficiary of the credit or the shipper on the transport document.