Letter of Credit Rules

UCP 600 e-Books That Every Exporter and Importer Should Read

Ozgur Eker (CDCS) Commercial Letter of Credit Rules, Letter of Credit Rules, Rules
ucp 600 ebooks

UCP 600 is the latest version of the letter of credit rules. It is drafted by ICC Banking Commission and published by ICC Services.

Its full name is 2007 Revision of Uniform Customs and Practice for Documentary Credits, UCP 600, and (ICC Publication No. 600).

All copyrights of UCP 600 belong to the ICC, therefore it is not legal to share it online without permission.

I strongly recommend all letter of credit practitioners to buy an original UCP 600 copy from ICC’s online store.

If you do not know how to buy an UCP 600 copy online, please read my related article: “How to Buy UCP 600 Online“.

On this page I would like to mention Top 4 UCP 600 e-books that has been published by banks for educational purposes.

UCP 600 : Understanding & Application

UCP 600 Understanding & Application

Written by: Victor Pena
Published by: Citigroup Inc in 2006

This is one of the best UCP 600 e-book that you can find online. UCP 600 : Understanding & Application is written by Victor Pena who was Vice President of Americas Regional Trade Advisor at that time.

This e-book published in 2 parts.

Introduction to UCP 600 – the new rules on documentary credits

 

Introduction to UCP 600 – the new rules on documentary credits

Written by: Trade and Export Finance Team
Published by: Danske Bank in 2007

Very short e-book published by Danske Bank covering the most important changes in UCP 600.

FAQs on documentary credits

FAQs on documentary credits

Written by:Transcript of Question and Answer Sessions of a Seminar called ‘Leveraging Documentary Credits to Grow Your Trade Business’
Published by:HSBC Bank Middle East Limited, in 2009

Another very important UCP 600 e-book. Gary Collyer, who was the Technical Adviser to the ICC Banking Commission at that time, answered questions raised by delegates delegates attending HSBC’s trade finance seminar.

First 86 questions are related to UCP 600 article by article and remaining 58 questions are general questions regarding the usage of letters of credit.

What is UCP 600?

what is ucp 600

Written by: ABN AMRO Bank N.V
Published by: ABN AMRO Bank N.V, in 2007

Another short UCP 600 explanatory e-book. Prepared by Abn Amro Bank, which is one of the biggest banks in Holland.

This e-book focuses on important revisions of latest version of the letter of credit rules.

Related Articles:




URR 725 – The Uniform Rules for Bank-to-Bank Reimbursements

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URR 725 - The Uniform Rules for Bank-to-Bank Reimbursements

What Does URR 725 Mean?

The URR 725 are the Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits ICC publication No. 725.

URR 725 was approved by the ICC national committees at the ICC Banking Commission in April 2008. URR 725 has been effective since 01 October 2008.

URR 725 is an updated version of previous rules for bank-to-bank reimbursements known as URR 525.

The revision was necessary to bring these long-standing rules into conformity with UCP 600, ICC’s universally used rules on letters of credit.

What is the Scope of URR 725?

The Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credits, ICC Publication No. 725, shall apply to any bank-to-bank reimbursement under documentary credits, when the reimbursement authorization expressly indicates that it is subject to these rules.

The rules are binding on all parties thereto, unless expressly modified or excluded by the reimbursement authorization.

How URR 725 Can be Applied to Bank to Bank Reimbursements under Documentary Credits?

URR 725 – The Uniform Rules for Bank-to-Bank ReimbursementsThe issuing bank is responsible for indicating in the documentary credit that the reimbursement is subject to URR 725.

As a result, both MT700 – Issue of a Documentary Credit and MT740 – Authorization to Reimburse swift messages must indicate the applicable rules.

Under MT700 swift message URR LATEST VERSION or NOTURR are the options regarding reimbursements.

  • URR LATEST VERSION means that URR rules will apply to the bank to bank reimbursements.
  • NOTURR means that not URR rules but UCP 600 article 13 will apply to the bank to bank reimbursements..

Table of Contents of URR 725

URR 725 consists of total 17 articles.

  • URR 725 – Article 1 Application of URR
  • URR 725 – Article 2 Definitions
  • URR 725 – Article 3 Reimbursement Authorizations Versus Credits
  • URR 725 – Article 4 Honour of a Reimbursement Claim
  • URR 725 – Article 5 Responsibility of the Issuing Bank
  • URR 725 – Article 6 Issuance and Receipt of a Reimbursement Authorization or Reimbursement Amendment
  • URR 725 – Article 7 Expiry of a Reimbursement Authorization
  • URR 725 – Article 8 Amendment or Cancellation of a Reimbursement Authorization
  • URR 725 – Article 9 Reimbursement Undertaking
  • URR 725 – Article 10 Standards for a Reimbursement Claim
  • URR 725 – Article 11 Processing a Reimbursement Claim
  • URR 725 – Article 12 Duplication of a Reimbursement Authorization
  • URR 725 – Article 13 Foreign Laws and Usages
  • URR 725 – Article 14 Disclaimer on the Transmission of Messages
  • URR 725 – Article 15 Force Majeure
  • URR 725 – Article 16 Charges
  • URR 725 – Article 17 Interest Claims/Loss of Value

Definitions from URR 725:

  • “Reimbursing bank” means the bank instructed or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank
  • “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.
  • “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.
  • “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.

ISBP: International Standard Banking Practices

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ISBP – International Standard Banking Practices

UCP Rules and Daily Practice: Need for Additional Publication Due to Problems in Daily Practice

UCP 600 is the latest version of the rules that govern letters of credit transactions worldwide.

UCP 600 is prepared by International Chamber of Commerce’s (ICC) Commission on Banking Technique and Practice.

One problem with the UCP rules is that they are written in a general manner, which means that they are not detailed enough to cover the day-to-day practice.

International Chamber of Commerce’s (ICC) Commission on Banking Technique and Practice determined that another publication is need, in addition to UCP, to close the gap between general principals of UCP and the daily practice.

So ISBP was born.

ISBP – International Standard Banking Practices: First Edition

ISBP is the short and well-known name of the ICC publication No:645; International Standard Banking Practice for the Examination of Documents under Documentary Letters of Credit.

ISBP was approved by ICC banking commission in October 2002. After this approval, ISBP became an official ICC document.

isbp 645ISBP was prepared in order to fill the gap between general principals of UCP and the daily practice.

UCP 500 was the latest version of the rules, which were governing the documentary letters of credit, at the time of ISBP was being prepared.

So first ISBP were constituted with the aim of explaining UCP 500 rules more explicitly.

Another aim of the drafting commission of the ISBP was to achieve internationally accepted standards for examination of documents under documentary letters of credit.

In order to succeed on this aim commission asked various ICC national committees and members to send checklists on how documents were examined in their organizations.

After 14 meetings and 4 different drafts, the ISBP was finally put into its final shape.

ISBP 2007: First Revision

UCP 500 is revised in 2007. UCP 600 replaced the previous rules. With the revision of the UCP, it has become necessary to renew the ISBP to bring it in line with the new letters of credit rules.

isbp 2007Full name of the second version of the ISBP is International Standard Banking Practice for the Examination of Documents under Documentary Credits, 2007 revision for UCP 600.

ICC publication number is 681.

ISBP 2007 consists of 10 chapters and consecutive 185 paragraphs. Headings of the ISBP 2007 chapters are given below.

Under each chapter, very detailed explanations can be found relating to the specific subject.

  • PRELIMINARY CONSIDERATIONS
  • GENERAL PRINCIPLES
  • DRAFTS AND CALCULATION OF MATURITY DATE
  • INVOICES
  • TRANSPORT DOCUMENT COVERING AT LEAST TWO DIFFERENT MODES OF TRANSPORT
  • BILL OF LADING
  • CHARTER PARTY BILL OF LADING
  • AIR TRANSPORT DOCUMENT
  • ROAD, RAIL OR INLAND WATERWAY TRANSPORT DOCUMENTS
  • INSURANCE DOCUMENT AND COVERAGE
  • CERTIFICATES OF ORIGIN

ISBP 2013: Second Revision

As of July 2013 ISBP revised once again.

International Standard Banking Practice – ISBP 2013 is the latest and the most comprehensive guide to handling and examining trade documents under letters of credit.

ISBP 2013 published by ICC with the ICC Publication No. 745.

ICC defines the importance of new International Standard Banking Practice edition with these words

“An invaluable source of practical information for trade finance professionals and academics, this revised edition of ISBP provides readers with the latest ICC approved guidelines for all parties to documentary credits.”

ICC emphasize that ISBP is the best reference book in banking practices for international letters of credit documents subject to UCP 600.

Use of ISBP has significantly reduced international discrepancies for documentary credits and is regularly used by banking, logistics, insurance, legal and corporate professionals and academics worldwide.

It is a great companion book with UCP 600.

isbp 2013Who Can Use International Standard Banking Practice – ISBP 2013 in Documentary Credit Transactions?

All professionals, banking, logistics, insurance, legal and corporate professionals and academics worldwide, who deal with documentary credits can use International Standard Banking Practice – ISBP 2013 as a 1st reference book on their daily routine.

What is new with the International Standard Banking Practice – ISBP 2013 ?

Previous International Standard Banking Practice which is called ISBP 2007 published in year 2007 by ICC was covering below trade documents:

  • DRAFTS
  • INVOICES
  • TRANSPORT DOCUMENT COVERING AT LEAST TWO DIFFERENT MODES OF TRANSPORT
  • BILL OF LADING
  • CHARTER PARTY BILL OF LADING
  • AIR TRANSPORT DOCUMENT
  • ROAD, RAIL OR INLAND WATERWAY TRANSPORT DOCUMENTS
  • INSURANCE DOCUMENT AND COVERAGE
  • CERTIFICATES OF ORIGIN

In addition to above stated documents International Standard Banking Practice – ISBP 2013 also covers following documents;

  • PACKING LIST
  • WEIGHT LIST
  • BENEFICIARY CERTIFICATE
  • NON-NEGOTIABLE SEA WAYBILLS
  • ANALYSIS, INSPECTION, HEALTH, QUANTITY AND QUALITY CERTIFICATE

Latest Version of UCP: What are the Differences Between UCP 400, UCP 500 and UCP 600

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Latest Version of UCP: What are the Differences Between UCP 400, UCP 500 and UCP 600

Almost all of the letters of credit issued in swift format having a clause under field “40E: Applicable Rules” telling us that the letter of credit subject to “UCP Latest Version“.

In this post, I explain the meaning of UCP and its latest version.

What Does UCP Mean?

UCP is the short form of Uniform Customs and Practice for Documentary Credits.

UCP is the set of international rules that govern the letter of credit transactions throughout the world.

It would be necessary to state that some professionals mistakenly use UCPDC abbreviation instead of UCP. Correct usage should be UCP for the Uniform Customs and Practice for Documentary Credits not UCPDC.

What is the Latest Version of UCP?

First international letter of credit rules published nearly 80 years ago in year 1933. Since then letter of credit rules have been revised regularly by ICC ( International Chamber of Commerce).

Let us have a look at the UCP history below,

  • 1933 – Uniform Customs and Practice for Commercial Documentary Credits
  • 1951 Revision – Uniform Customs and Practice for Commercial Documentary Credits
  • 1962 Revision – Uniform Customs and Practice for Documentary Credits
  • 1974 Revision – Uniform Customs and Practice for Documentary Credits
  • 1983 Revision – Uniform Customs and Practice for Documentary Credits (UCP 400)
  • 1993 Revision – Uniform Customs and Practice for Documentary Credits (UCP 500)
  • 2007 Revision – Uniform Customs and Practice for Documentary Credits (UCP 600)

As indicated above 2007 Revision of the letter of credit rules are the latest version of the Uniform Customs and Practice for Documentary Credits.

Why Banks Give Reference to the Latest Version of UCP in Letters of Credit?

Banks, who do not want to create any ambiguity when issuing letters of credit, should always mention that letters of credit that they have issued is subject to “UCP Latest Version“.

If issuing banks would not act as explained above, by not giving express reference to the exact version of letter of credit rules when issuing letters of credit, then one of the letter of credit parties may indicate that they would like to use other version of Uniform Customs and Practice for Documentary Credits when fulfilling their obligations.

How to Buy UCP 600 Online?

Ozgur Eker (CDCS) Commercial Letter of Credit Rules, Rules ,
How to Buy UCP 600 Online?

It is vital importance for each professional, who deals with letters of credit, to work with right sources and reference publications.

UCP 600 and ISBP 2013 are the only official rule books that govern commercial letter of credit transactions. They are published by ICC Banking Commission.

Standby letter of credit rules are known as ISP 98.

All other publications, even published by ICC, will not be regarded as an official letter of credit rules books.

I have just received a message from one of my followers. She would like to know more about UCP 600 and she wants to know where to buy UCP 600 from internet.

Here is her message:

Dear team from “Letter of Credit.biz”

I would like to first of all introduce myself as a person who is constantly looking for more information on letters of credit. I am always interested on those issues and for me, LC´s are very important tools in my work.

I always looked for UCP 600 rules on internet, but I just found some website with many commentaries. But Is there an neutral book just with the rules as they are? And where can I buy it?

In case this book is not on sale, where can I download it from internet?

Thanks a lot!

Laura

Dear Laura,

Please select your reference books from ICC publications, because the more you walk away from official ICC publications, the closer you get to the confusion.

For commercial letters of credit you should buy UCP 600 and ISBP 2013 as a reference books.

These two publications are the only official ICC publications that govern the letters of credit rules.

You can buy UCP 600 e-book version from this link : UCP 600 e-book and you can buy ISBP 2013 e-book version from this link : ISBP 2013 e-book

For standby letters of credit you should buy ISP 98. You can buy ISP 98 e-book version from this link : ISP 98 e-book

UCP 600 and ISP 98 are neutral rule books. ISBP 2013 is more like an explanation book of UCP 600 supported with examples.

UCP 600

Ozgur Eker (CDCS) Commercial Letter of Credit Rules, Rules ,
UCP 600

What is UCP 600?

UCP 600 is the latest version of the rules that govern letters of credit transactions worldwide.

UCP 600 is prepared by International Chamber of Commerce’s (ICC) Commission on Banking Technique and Practice.

Its full name is 2007 Revision of Uniform Customs and Practice for Documentary Credits, UCP 600, and (ICC Publication No. 600).

The ICC Commission on Banking Technique and Practice approved UCP 600 on 25 October 2006. The rules have been effective since 1 July 2007.

UCP 500 was the rules that had been in implementation before UCP 600.

There are several significant differences exist between UCP 600 and UCP 500. Some of these differences are as follows;

  • The number of articles reduced from 49 to 39 in UCP 600;
  • In order to reach a standard meaning of terms used in the rules and prevent unnecessary repetitions two new articles have been added to the UCP 600. These newly added articles are Article 2 “Definitions” and Article 3 “Interpretations”. These articles bring more clarity and precision in the rules;
  • A definitive description of negotiation as “purchase” of drafts of documents;
  • New provisions, which allow for the discounting of deferred payment credits;
    The replacement of the phrase “reasonable time” for acceptance or refusal of documents by a maximum period of five banking days.

History of UCP

First uniform rules published by ICC in 1933. Revised versions were issued in 1951, 1962, 1974, 1983 and 1993.

  • 1933 – Uniform Customs and Practice for Commercial Documentary Credits
  • 1951 Revision – Uniform Customs and Practice for Commercial Documentary Credits
  • 1962 Revision – Uniform Customs and Practice for Documentary Credits
  • 1974 Revision – Uniform Customs and Practice for Documentary Credits
  • 1983 Revision – Uniform Customs and Practice for Documentary Credits
  • 1993 Revision – Uniform Customs and Practice for Documentary Credits

Currently majority of letters of credit issued everyday is subject to latest version of the UCP.

This widely acceptance is the key sign that shows the importance of the UCP, which are the most successful private rules for trade ever developed.

eUCP

Most of the presentations are being made in paper or traditional format still in today’s letters of credit environment.

However, as telecommunication technology is expanding its borders, it is highly expected that in the very near future traditional processes will be substituted with the electronic paperless transactions.

In order to establish set of rules that governs electronic presentations the ICC Banking Commission established a Working Group consisting of experts in the UCP, electronic trade, legal issues and related industries, such as transport, to prepare the appropriate rules for electronic and mixed presentations.

Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation or “eUCP” is the result of the efforts of this committee.

The eUCP is not a revision of the UCP.

The UCP will continue to provide the industry with rules for paper letters of credit for many years.

The eUCP is a supplement to the UCP that, when used in conjunction with the UCP, will provide the necessary rules for the presentation of the electronic equivalents of paper documents under letters of credit.

ISP 98 – International Standby Practices

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ISP 98 – International Standby Practices

ISP 98: Standby Letters of Credit Rules

ISP 98 is the set of rules that governs standby letters of credit. They have been published by ICC Banking Commission. ISP 98 – International Standby Practices ICC Publication No. 590 , 1998 Edition. ISP 98 is in force as of January 1, 1999

ISP 98 – International Standby Practices is the title of the book that is published by ICC to govern the standby letters of credit transactions (SBLC ).

ISP 98 consists of 76 pages in total. Full details of ISP 98 for ordering considerations are as follows : ISP 98 – International Standby Practices ICC Publication No. 590 , 1998 Edition. ISP 98 is in force as of January 1, 1999.

How to Buy ISP 98?

ISP 98 is both available by e-book format and hard copy. It is sold under online ICC Bookstores. You can buy ISP 98 from this link.

ISP 98 - International Standby Practices

Benefit of ISP 98 – International Standby Practices

ISP 98 International Standby Practices was written exclusively for standby letters of credit.

Prior to ISP 98 standby letters of credit were issued under commercial letters of credit rules. This was not an effective way as standby letters of credit and commercial letters of credit have significant differences with regards to scope and practice.

ISP 98 has been reduced the cost and time of drafting, limit problems in handling and avoid countless disputes and unnecessary litigation that have resulted from the absence of internationally agreed rules on standby letters of credit.

International Standby Practices fills an important gap in the market place.

 

The 98 Rules in International Standby Practices (ISP98) offer a precise and detailed framework for practitioners dealing with standby letters of credit.

Developed by the Institute of International Banking Law and Practice, endorsed and published by the International Chamber of Commerce (ICC), ISP98 is the standardized text for the use of standbys worldwide.

ISP98 Rules

  • contain precise definitions of key terms such as “original” and “automatic amendment”
  • cover in detail the standby process from “Obligations” to “Syndication”
  • provide neutral rules acceptable in most situations
  • save both time and money in negotiating and drafting standby terms
  • help avoid litigation and unexpected loss
  • propose basic definitions should the standby involve presentation of documents by electronic means
  • provide international standards for the use of this fast growing financial instrument

Table of Contents

  • Rule 1 General Provisions
  • Rule 2 Obligations
  • Rule 3 Presentations
  • Rule 4 Examination
  • Rule 5 Notice, Preclusion, and Disposition of Documents
  • Rule 6 Transfer, Assignment, and Transfer by Operation of Law
  • Rule 7 Cancellation
  • Rule 8 Reimbursement Obligations
  • Rule 9 Timing
  • Rule 10 Syndication/Participation