Scribd
Upload
2K views2 pages

Summary of The Key Articles in UCP 600

The document summarizes key differences between Articles 1 of UCP 500 and UCP 600. [1] UCP 600 introduces rules that apply when a letter of credit expressly states it is subject to UCP 600, allowing modification or exclusion of rules. [2] UCP 600 does not require incorporation of rules, changes application from "all" credits to "any", and allows modification of rules. [3] Article 1 establishes UCP 600 articles as rules that can be modified, unlike UCP 500 which required incorporation of articles.

Uploaded by

Jhoo Angel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
2K views2 pages

Summary of The Key Articles in UCP 600

The document summarizes key differences between Articles 1 of UCP 500 and UCP 600. [1] UCP 600 introduces rules that apply when a letter of credit expressly states it is subject to UCP 600, allowing modification or exclusion of rules. [2] UCP 600 does not require incorporation of rules, changes application from "all" credits to "any", and allows modification of rules. [3] Article 1 establishes UCP 600 articles as rules that can be modified, unlike UCP 500 which required incorporation of articles.

Uploaded by

Jhoo Angel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Summary of the Key Articles in UCP 600

Articles 1 – 5 – General Provisions and Definitions

Articles 6 – 13 – Liabilities and Responsibilities

Articles 14 – 17 – Examination of Documents

Articles 18 – 28 – Documents

Articles 29 – 33 – Miscellaneous Provisions

Articles 34 – 37 – Disclaimers

Articles 38 – 39 – Transferable Credit & Assignment

UCP 500 ARTICLE 1:

“The Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No.
500, shall apply to all Documentary Credits (including to the extent to which they may be applicable,
Standby Letter(s) of Credit) where they are incorporated into the text of the Credit. They are binding
on all parties thereto, unless otherwise expressly stipulated in the Credit”.

UCP 600 ARTICLE 1: APPLICATION OF UCP

“The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No.
600 (“UCP”) are rules that apply to any documentary credit (“credit”) (including, to the extent to
which they may be applicable, any standby letter of credit) when the text of the credit expressly
indicates that it is subject to these rules. They are binding on all parties thereto unless expressly
modified or excluded by the credit”.1)

Difference between UCP 500 and UCP 600 given in article 1:

1. style change in not capitalizing the term “credit”;

2. introduction of the term “rules”;

3. change to apply to “any” documentary credit rather than “all” in UCP 500;

4. change from “where incorporated in the rules” to “when the text of the credit expressly indicates
that it is subject to these rules”;

change to “unless expressly modified or excluded by the credit”.

It is worth noting that, the article 1 of the UCP 500 stated that it applied whenever the parties
incorporated it in to the text of the credit. Article 1 of the UCP 600 has introduced a significant
change to the applicability of the rules. Now the UCP 600 articles are considered “rules”.
Accordingly, when the letter of credit expressly states that it is governed by the UCP 600 the
contracting parties are bound by the rules set out in the UCP 600 and may exclude or modify its
application by express wording to that effect in the credit document.
This is the first time that the UCP has been mentioned in the context of rules. By establishing the
articles as rules negates the need for an article to either commerce or include the words “unless
otherwise stipulated in the credit” or similar. Article 1 of the UCP 600 allows any rule (the concept in
UCP 600 is that a rule is a rule) to be modified or excluded by the terms and conditions of a credit.

Points to know from Article 1

1. Is it mandatory that only banking entities can issue Letter of Credit, subject to UCP 600?

In October 2002, the ICC issued its opinion (R. 505) indicating that any party could issue a credit
subject to UCP 500, the earlier version of UCP 600. The content of that opinion equally applies under
UCP 600 as well. Also any non banking entities can add confirmation to a credit and negotiate
documents drawn under it. The decision as to whether or not this was acceptable would be for the
beneficiary to determine.

2. Are domestic letters of credit covered under the UCP 600 rules?

Yes. No distinction is made in the UCP between the credits that can be classified as domestic and
cross border.

3. As per article 1 of UCP 600, parties to a credit have the right to modify or exclude any article or
sub-article from the rules i.e “They are binding on all parties thereto unless expressly modified or
excluded by the credit” . Is it true to say that article or sub -articles whose text includes the term
“MUST” ( e.g sub article 14 (a)) cannot be modified or excluded?

Obviously there are rules in UCP 600 that govern the obligations of banks which, if excluded, would
undermine the LC process. Although there are rules that include the word “Must” within their
content, which would imply they cannot be excluded, it is possible to do so. However for such
instances it would usually require a new rule to be inserted in the credit. For example please take
sub article 14 (a) which states that which documents banks “must“ examine and the basis under
which they are required to examine. If this rule was excluded, the credit would need to specify the
basis for the examination and determination of compliance.

You might also like