ICC Digital Library

International Standard Banking Practice

Preliminary Considerations

Paragraph 1 to 7

Scope of the publication

i) This publication is to be read in conjunction with UCP 600 and not in isolation.

ii) The practices described in this publication highlight how the articles of UCP 600 are to be interpreted and applied, to the extent that the terms and conditions of the credit, or any amendment thereto, do not expressly modify or exclude an applicable article in UCP 600.

The credit and amendment application, the issuance of the credit and any amendment thereto

iii) The terms and conditions of a credit and any amendment thereto are independent of the underlying sale or other contract even if the credit or amendment expressly refers to that sale or other contract. When agreeing the terms of the sale or other contract, the parties thereto should be aware of the ensuing implications for the completion of the credit or amendment application.

iv) Many of the problems that arise at the document examination stage could be avoided or resolved by the respective parties through careful attention to detail in the credit or amendment application and issuance of the credit or any amendment thereto. The applicant and beneficiary should carefully consider the documents required for presentation, by whom they are to be issued, their data content and the time frame in which they are to be presented.

v) The applicant bears the risk of any ambiguity in its instructions to issue or amend a credit. An issuing bank may, unless the applicant expressly instructs to the contrary, supplement or develop those instructions in a manner necessary or desirable to permit the use of the credit or any amendment thereto. An issuing bank should ensure that any credit or amendment it issues is not ambiguous or conflicting in its terms and conditions.

vi) The applicant and issuing bank should be fully aware of the content of UCP 600 and recognize that articles such as 3, 14, 19, 20, 21, 23, 24, 28 (i), 30 and 31 define terms in a manner that may produce unexpected results. 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.

vii) A credit or any amendment thereto should not require presentation of a document that is to be issued, signed or countersigned by the applicant. If, nevertheless, a credit or amendment is issued including such a requirement, the beneficiary should consider the appropriateness of such a requirement and determine its ability to comply with it, or seek a suitable amendment.

viii) A request to insert the credit number on a document is usually at the instigation of the issuing bank in order to facilitate the collation of documents should one or more documents become detached from the presentation. Provided all the stipulated documents are received by the issuing bank, the absence of a credit number or the mistyping of that number on a document does not constitute a reason for refusal. The exception to this position is where it is a requirement of the importing country that the credit number be stated on one or more documents. In such circumstances, the credit must clearly indicate that this is the reason for the number to be shown on that or those documents.

ix) An issuing bank should not incorporate in a credit administrative conditions such as a requirement for an additional set of copy documents to be presented for the issuing bank’s use, or a condition that all documents may not be stapled. If, nevertheless, such conditions are incorporated into a credit but not complied with, this will not constitute a reason for refusal.