Ucp600 (introductory articles)
Economy & Finance
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UCP 600Presented by :Malik Allah NawazJunaid Zamir
Article 1Application of UCP
What is UCP?
• It is rules that apply to any documentary credit.
• This practice has been standardized by the ICC (International Chamber of Commerce) by publishing the UCP in 1933.
• They are binding on all parties unless expressly modified or excluded by the credit.
• A standard, commercial letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable (cannot be amended or cancelled) payment undertaking.
• Letters of credit are generally used in International trade.
Definitions• Advising bank
– Is the bank that advises the credit at the request of the issuing bank
• Applicant– Is the party on whose request credit is issued
• Banking Day– The day on which bank is open and performing its operations.
• Beneficiary– The party on whose name credit is issued.
• Complying Presentation– It is a presentation that is in accordance with the terms and conditions
of the credit
• Confirmation– Means a definite undertaking of the confirming bank.
• Confirming Bank– Means the bank that adds its confirmation upon the issuing bank’s
• Credit– An arrangement that is irrevocable and constitutes definite
• Honor– To pay at sight if the credit is available by sight payment.– To pay at maturity if the credit is available by deferred payment.– To accept bill of exchange.
• Issuing Bank– The bank that issues a credit at the request of applicant
• Negotiation– Purchase of draft/documents by the nominated bank by agreeing to
advance funds to the beneficiary.
• Nominated Bank– The bank with which the credit is available.
• Presentation– Delivery of documents under a credit to the issuing bank.
• Presenter– Is a beneficiary either bank or other party that makes a presentation.
Interpretations• A credit is irrevocable even if there is no indication to
• A document may be signed by handwriting, stamp, symbol or any other mechanical or electronic method of authentication.
• Document should be legalized , certified by signature, stamp or label
• Branches of bank in different countries are considered to be separate banks
Interpretations• Terms such as first class, well known, qualified, independent,
official or local are used to describe the issuer of a document.
• Words such as prompt / immediately / as soon as possible will be ignored unless required to be used in the document.
• Words “on or about” will be interpreted as a stipulation that an event is to occur during a period a of 5 calendar days or before/after the 5 calendar days or specified date.
• Words to / until / till / from / between whenever are used to determine a period of shipment and word before / after exclude the date mentioned.
• Words from / after determine maturity date exclude the date mentioned.
• Terms 1st half and 2nd half of a month shall be considered as 1st – 15th & 16th to the last day of the month (all dates inclusive).
• Terms beginning / middle / end of month shall be considered as 1st – 10th , 11th – 20th and the 21st to the last day of the month (all dates inclusive).