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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
by Dan Taylor
Although standby letters of credit came into common use in the 1950s, they were not included in UCP 222. During the 1983 revision, US banks requested that standby letters of credit be added. One of the significant changes in the revision was to include the wording “ … including, to the extent to which they may be applicable, standby letters of credit, … ” in the opening general provision, which was now entitled article 1. The reference to standbys was also added to article 2, including them as part of the definition of “credit”. A number of other changes were made to accommodate standbys. The terms “services and/or other performances” was added to the rule stating that in credit operations all parties deal in documents and not in goods, and the term “drawings” was added to the articles dealing with partial shipments and instalments.
A significant restructuring of the rules was made in the 1983 revision, and considerable additional language was added to many articles. In particular, the articles dealing with the obligation of the issuing and confirming banks, availability and transport were changed significantly and completely restructured.
A few additional highlights of the revision were:
These are only a few of the many changes made in the revision. For a complete detailed comparison of the 1974 UCP and 1983 UCP, refer to the UCP 1974/1983 Revisions, Compared and Explained authored by Bernard Wheble and published by ICC (out of print).
Publication No. 400
A. GENERAL PROVISIONS AND DEFINITIONS
These articles apply to all documentary credits, including, to the extent to which they may be applicable, standby letters of credit, and are binding on all parties thereto unless otherwise expressly agreed. They shall be incorporated into each documentary credit by wording in the credit indicating that such credit is issued subject to Uniform Customs and Practice for Documentary Credits, 1983 Revision, ICC Publication No. 400.
For the purposes of these articles, the expressions “documentary credit(s)” and “standby letter(s) of credit” used herein (hereinafter referred to as “credit(s)”), mean any arrangement, however named or described, whereby a bank (the issuing bank), acting at the request and on the instructions of a customer (the applicant for the credit),
against stipulated documents, provided that the terms and conditions of the credit are complied with.
Credits, by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the credit.
In credit operations all parties concerned deal in documents, and not in goods, services and/or other performances to which the documents may relate.
Instructions for the issuance of credits, the credits themselves, instructions for any amendments thereto and the amendments themselves must be complete and precise.
In order to guard against confusion and misunderstanding, banks should discourage any attempt to include excessive detail in the credit or in any amendment thereto.
A beneficiary can in no case avail himself of the contractual relationships existing between the banks or between the applicant for the credit and the issuing bank.
B. FORM AND NOTIFICATION OF CREDITS
A credit may be advised to a beneficiary through another bank (the advising bank) without engagement on the part of the advising bank, but that bank shall take reasonable care to check the apparent authenticity of the credit which it advises.
When a bank is instructed to issue, confirm or advise a credit similar in terms to one previously issued, confirmed or advised (similar credit) and the previous credit has been the subject of amendment(s), it shall be understood that the similar credit will not include any such amendment(s) unless the instructions specif y clearly the amendment(s) which is/are to apply to the similar credit. Banks should discourage instructions to issue, confirm or advise a credit in this manner.
If incomplete or unclear instructions are received to issue, confirm, advise or amend a credit, the bank requested to act on such instructions may give preliminary notification to the beneficiary for information only and without responsibility. The credit will be issued, confirmed, advised or amended only when the necessary information has been received and if the bank is then prepared to act on the instructions. Banks should provide the necessary information without delay.
C. LIABILITIES AND RESPONSIBILITIES
Banks must examine all documents with reasonable care to ascertain that they appear on their face to be in accordance with the terms and conditions of the credit. Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in accordance with the terms and conditions of the credit.
Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed thereon; nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever.
Banks assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any messages, letters or documents, or for delay, mutilation or other errors arising in the transmission of any telecommunication. Banks assume no liability or responsibility for errors in translation or interpretation of technical terms, and reserve the right to transmit credit terms without translating them.
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 any strikes or lockouts. Unless specifically authorized, banks will not, upon resumption of their business, incur a deferred payment undertaking, or effect payment, acceptance or negotiation under credits which expired during such interruption of their business.
When documents other than transport documents, insurance documents and commercial invoices are called for, the credit should stipulate by whom such documents are to be issued and their wording or data content. If the credit does not so stipulate, banks will accept such documents as presented, provided that their data content makes it possible to relate the goods and/or services referred to therein to those referred to in the commercial invoice(s) presented, or to those referred to in the credit if the credit does not stipulate presentation of a commercial invoice.
Unless otherwise stipulated in the credit, banks will accept a document bearing a date of issuance prior to that of the credit, subject to such document being presented within the time limits set out in the credit and in these articles.
D.1. Transport documents (documents indicating loading on board or dispatch or taking in charge)
Unless a credit calling for a transport document stipulates as such document a marine bill of lading (ocean bill of lading or a bill of lading covering carriage by sea), or a post receipt or certificate of posting:
If a credit calling for a transport document stipulates as such document a marine bill of lading:
If the credit stipulates dispatch of goods by post and calls for a post receipt or certificate of posting, banks will accept such post receipt or certificate of posting if it appears to have been stamped or otherwise authenticated and dated in the place from which the credit stipulates the goods are to be dispatched.
Unless otherwise stipulated in the credit, banks will accept transport documents which bear a clause on the face thereof such as “shipper’s load and count” or “said by shipper to contain” or words of similar effect.
Unless otherwise stipulated in the credit, banks will accept transport documents indicating as the consignor of the goods a party other than the beneficiary of the credit.
D.2. Insurance documents
Unless otherwise stipulated in the credit, or unless it appears from the insurance document(s) that the cover is effective at the latest from the date of loading on board or dispatch or taking in charge of the goods, banks will refuse insurance documents presented which bear a date later than the date of loading on board or dispatch or taking in charge of the goods as indicated by the transport document(s).
Where a credit stipulates “insurance against all risks”, banks will accept an insurance document which contains any “all risks” notation or clause, whether or not bearing the heading “all risks”, even if indicating that certain risks are excluded, without responsibility for any risk(s) not being covered.
Banks will accept an insurance document which indicates that the cover is subject to a franchise or an excess (deductible), unless it is specifically stipulated in the credit that the insurance must be issued irrespective of percentage.
D.3. Commercial invoice
D.4. Other documents
If a credit calls for an attestation or certification of weight in the case of transport other than by sea, banks will accept a weight stamp or declaration of weight which appears to have been superimposed on the transport document by the carrier or his agent unless the credit specifically stipulates that the attestation or certification of weight must be by means of a separate document.
E. MISCELLANEOUS PROVISIONS
Quantity and amount
Partial drawings and/or shipments
Drawings and/or shipments by instalments
If drawings and/or shipments by instalments within given periods are stipulated in the credit and any instalment is not drawn and/or shipped within the period allowed for that instalment, the credit ceases to be available for that and any subsequent instalments, unless otherwise stipulated in the credit.
Expiry date and presentation
Banks are under no obligation to accept presentation of documents outside their banking hours.
Loading on board, dispatch and taking in charge (shipment)
The words “to”, “until”, “till”, “from”, and words of similar import applying to any date term in the credit will be understood to include the date mentioned. The word “after” will be understood to exclude the date mentioned.
The terms “first half ”, “second half ” of a month shall be construed respectively as from the 1st to the 15th, and the 16th to the last day of each month, inclusive.
The terms “beginning”, “middle”, or “end” of a month shall be construed respectively as from the 1st to the 10th, the 11th to the 20th, and the 21st to the last day of each month, inclusive.
Assignment of proceeds
The fact that a credit is not stated to be transferable shall not affect the beneficiary’s right to assign any proceeds to which he may be, or may become, entitled under such credit, in accordance with the provisions of the applicable law.