DC Insight

Unusually, our page 3 story features a debate. The subject, UCP 600 article 12, is not a new one in DCInsight. But it's one that continues to excite interest from readers.

In this case, our two correspondents have diametrically different views on the precision with which article 12 is drawn.

One view, eloquently expressed by Rupnarayan Bose, contends that article 12 doesn't necessarily protect holders of deferred payment undertakings from the fraud defence and points to the primacy of negotiable instruments law. The other, by Jim Barnes, stresses that "Negotiable instruments law... is a poor substitute for ... L/C law based on the 'independence' of L/C obligations."

This argument calls to mind others in past issues of Insight, in which commentators have pointed out that certain articles of the UCP are at variance with laws passed in a range of countries. The question then arises: do the UCP, as voluntary rules of practice, have to mimic laws, whether on bills of exchange, insurance or other topics, or is the UCP a unique set of rules for a specific product that follow rules of their own? Of course, if there's a conflict, adherents of the UCP have always accepted that laws trump rules of practice in every case.