Ucp600 (introductory articles)

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UCP 600 (introductory 3 articles). UCP 600 are the latest revision of the Uniform Customs and Practice that govern the operation of letters ofcredit.

Transcript of Ucp600 (introductory articles)

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UCP 600Presented by :Malik Allah NawazJunaid Zamir

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Article 1Application of UCP

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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.

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Documentary 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.

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Article 2Definitions

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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

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• 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.


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• 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.


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Article 3Interpretations

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Interpretations• A credit is irrevocable even if there is no indication to

that effect.

• 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

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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.

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• 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).


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