We frequently receive L/C's by swift MT700 from various egyptian banks.
.
As per SWIFT standards the L/C's are automatically subject to UCP 500 rules.
.
Isn't it a contradictionary when the additional conditions shows an exclusion of one or more articles of UCP 500?
excluding of articles in the l/c
-
RichardSuikerbuik
- Posts: 2
- Joined: Fri Apr 05, 2019 5:25 pm
excluding of articles in the l/c
I think that there is no tie between being automatically subject to UCP and having some exclusions regard with UCP items for an L/C opening.
However,Art 1 of UCP already allows banks to vary the items of application of UCP.
Where the issuing bank includes in its issuance some"exclusions" then if the beneficiary or confirming bank do not agree with the conditions,they should have the L/C amended.
Yahya ,
However,Art 1 of UCP already allows banks to vary the items of application of UCP.
Where the issuing bank includes in its issuance some"exclusions" then if the beneficiary or confirming bank do not agree with the conditions,they should have the L/C amended.
Yahya ,
excluding of articles in the l/c
Richard,
I am surprised it is only credits from Egypt that contain ‘overriders’ of UCP articles. Practically ALL the credits my bank issues do. Whatever, I am also surprised that anyone could object to this practice, in principle, as Article 1 of the UCP quite correctly recognises:
“They [the UCP] are binding on all parties thereto, UNLESS OTHERWISE EXPRESSLY STIPULATED IN THE CREDIT.” [emphasis added]
For some reason people often seem to think that the UCP are some ‘hallowed’ codification or set of rules that must never be ‘tampered’ with, when in fact all they are is essentially a set of standard contract terms that the parties to the (credit) contract are at liberty to vary in anyway they see fit. As Yahya says, if the parties to the (credit) contract don’t like the overriders they don’t present documents until the credit is amended.
Jeremy
[edited 1/25/2005 10:58:37 AM]
I am surprised it is only credits from Egypt that contain ‘overriders’ of UCP articles. Practically ALL the credits my bank issues do. Whatever, I am also surprised that anyone could object to this practice, in principle, as Article 1 of the UCP quite correctly recognises:
“They [the UCP] are binding on all parties thereto, UNLESS OTHERWISE EXPRESSLY STIPULATED IN THE CREDIT.” [emphasis added]
For some reason people often seem to think that the UCP are some ‘hallowed’ codification or set of rules that must never be ‘tampered’ with, when in fact all they are is essentially a set of standard contract terms that the parties to the (credit) contract are at liberty to vary in anyway they see fit. As Yahya says, if the parties to the (credit) contract don’t like the overriders they don’t present documents until the credit is amended.
Jeremy
[edited 1/25/2005 10:58:37 AM]
-
KimChristensen
- Posts: 404
- Joined: Fri Apr 05, 2019 5:21 pm
excluding of articles in the l/c
Dear Richard,
Jeremy is of course right – as he usually is
However; I see this as an increasing trend; which I personally do not like.
I can see perfectly good reasons to exclude certain articles (or sub-articles) from the UCP on a case-by-case basis.
One should remember however that the UCP is a standard set of rules, and the thing that in my mind makes them as strong and popular as they are, is the fact that these are STANDARDS, which (in the most cases) are interpreted the same way, wherever you are. In principle you do not need the UCP – you could just include all the articles into the L/C text that you like – plus some “self invented” – plus some changed plus plus plus !!
By doing that the idea of the L/C would get totally lost. Fist of all because the text would be very long, and secondly because you would have to read it much more carefully than you in fact do now – because you would not know if some wording have been slightly changed, leading to a different result than you would expect.
In my mind this is exactly what is happening now: everything you do not like is removed or amended, in effect making the L/C handling much more difficult, time consuming and risky.
Is that really what we want?
Therefore I accept of course that the UCP can be changed in the specific credit – and sometimes for very good reasons, but the banks should take care, because at the end of the day, there may be a consequence that we would not like!
So – that was the moral hiccup of the day. I feel better already
Best regards
Kim
[edited 1/25/2005 8:23:40 PM: spelling error]
Jeremy is of course right – as he usually is
However; I see this as an increasing trend; which I personally do not like.
I can see perfectly good reasons to exclude certain articles (or sub-articles) from the UCP on a case-by-case basis.
One should remember however that the UCP is a standard set of rules, and the thing that in my mind makes them as strong and popular as they are, is the fact that these are STANDARDS, which (in the most cases) are interpreted the same way, wherever you are. In principle you do not need the UCP – you could just include all the articles into the L/C text that you like – plus some “self invented” – plus some changed plus plus plus !!
By doing that the idea of the L/C would get totally lost. Fist of all because the text would be very long, and secondly because you would have to read it much more carefully than you in fact do now – because you would not know if some wording have been slightly changed, leading to a different result than you would expect.
In my mind this is exactly what is happening now: everything you do not like is removed or amended, in effect making the L/C handling much more difficult, time consuming and risky.
Is that really what we want?
Therefore I accept of course that the UCP can be changed in the specific credit – and sometimes for very good reasons, but the banks should take care, because at the end of the day, there may be a consequence that we would not like!
So – that was the moral hiccup of the day. I feel better already
Best regards
Kim
[edited 1/25/2005 8:23:40 PM: spelling error]
-
larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
excluding of articles in the l/c
I agree with the sentiments of Kim, Jeremy and Yahya. To my mind, for every rule, there is at least one exception.
The principle of exclusions to the UCP is one thing, but we must be careful as to which rules we make exceptions and in which circumstances.
We are already facing a likely situation in the UCP 600 where Revocable Credits will disappear from the rules. In such circumstances, parties dealing in Revocable credits will be forced in all circumstances to exclude the article/s referring exclusively to irrevocable credits, or revert to earlier versions of the UCP.
Would you be happy to advise an irrevocable credit containing an exclusion clause relating to Art. 9 d i ?
Laurence
The principle of exclusions to the UCP is one thing, but we must be careful as to which rules we make exceptions and in which circumstances.
We are already facing a likely situation in the UCP 600 where Revocable Credits will disappear from the rules. In such circumstances, parties dealing in Revocable credits will be forced in all circumstances to exclude the article/s referring exclusively to irrevocable credits, or revert to earlier versions of the UCP.
Would you be happy to advise an irrevocable credit containing an exclusion clause relating to Art. 9 d i ?
Laurence