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UCP 600 (2007 Revision)

(Effective from 1st July, 2007)

Credit means any arrangement, however

named or described,
that is irrevocable and
thereby constitutes a definite undertaking
of the issuing bank
to honour a complying presentation. (Art.

Main Changes made in UCP 600

Reduction in the number of Articles from 49

in UCP 500 to 39 in UCP 600

New articles on 'definitions (Art.2) and
'interpretations' (Art.3) which provide more
clarity and precision in the explanation of
Time limit for examination of documents has
been changed to 5 banking days (Art.14)

Main Changes made in UCP 600

A Credit is irrevocable even if there is no

indication to that effect (Art.3)

The word "negotiation has been defined as
the purchase by the nominated bank of
drafts and/or documents under a complying
presentation, by either advancing or
agreeing to advance funds to the beneficiary

Main Changes made in UCP 600

Issuing bank can refuse discrepant documents and

then release them upon obtaining waiver of

discrepancies (Article 16(c)(iii)).
This article allows seller to provide instruction on
the remitting schedule on how the discrepant
documents should be dealt with when Issuing Bank
rejects them.
The address of the seller or buyer on the invoice
need not be the same as indicated in the LC. But
the addresses should be within same country.
(Art.14 j)

Important Clauses in UCP

Art.4 : Banks are not concerned with the sale

contract even if a reference is made in the credit.

Art.5 : Banks deal with documents and not with
Art.6 : Credit cannot call for draft drawn on
Art.7 : Issuing banks undertaking to make
payment against credit available by i. Sight
Payment ii. Deferred Payment iii. Acceptance and
iv. Negotiation

UCP 600 (Contd.)

Art. 8 a (ii) Confirming Bank must negotiate,

without recourse, if the credit is available for

negotiation with the confirming bank.
Art.10 a : Credit cannot be amended without the
consent of issuing/confirming bank and
Art.10 c : Beneficiary should communicate his
acceptance or rejection. If not amendment is
deemed accepted.
Art. 10 e : Partial acceptance of an amendment
amounts to rejection of the amendment.

UCP 600 (Contd.)

Art.13 b (i). : Issuing bank must provide reimbursement

Art.13 b (iii) : Issuing bank is liable to pay interest for delay in
payment by reimbursing bank
Art. 14 b : Nominated Bank/ Confirming Bank/ Issuing Bank each
will have 5 banking days to examine the documents
Art. 14 c : Documents should be submitted not later than 21 days
from date of shipment (but within the validity of LC)
Art. 14 d : Data in a document should conform to the terms of
credit, ISBP and should not be in conflict with other documents.
Art. 14 e & 18 c : Description of goods in invoice should tally with
Art. 14 (i) : Invoice/ other document can be dated prior to LC
Art. 14 (j) : Address of beneficiary/ applicant need not tally with
the address in the LC (but should be within the same country)

UCP 600 (Contd.)

Art.16 c : If issuing bank refuses the document it should send

a single notice of refusal mentioning all the discrepancies.

Art. 18 b : Invoice value may be in excess of credit provided
the nominated bank negotiates the bill only for the LC
amount (Such bill is payable by issuing bank)
Art. 20 a (ii) : B/L with notation on board with date and
signature (not pre-printed) is acceptable. Such date is
considered as date of shipment
Art. 23 a (iii) : Date of shipment in case of airway bill is
normally the date of issue. If there is a separate notation
indicating date of shipment such date will be considered.
Art. 27 : Clean B/L is one which does not bear any clause
indicating defective condition of goods or their packaging

UCP 600 (Contd)

Art. 28 e : Date of issue of Insurance policy should

not be later than date of shipment

Art.28 f (i) : Insurance policy should be in the same
currency as in LC
Art. 28 f (ii) If LC does not mention amount if
insurance coverage it should be arranged for 110%
of CIF value
Art. 29 a: If LC expiry date falls on a banking holiday
documents can be presented next day
Art. 36 : In case of Force Majeure (riot, war, strike
etc) if bank is closed and if LC expires on that day,
documents will not be accepted on next working day.

UCP 600
Art.30 : Tolerance for Credit Amount,

Quantity or Unit Price:

Art. 30 a :Tolerance 10% if LC mentions
quantity about or approximately
Art. 30 b : It is 5% if such words are not
used (but not exceeding value of LC)
Art. 30 b : No tolerance is permitted if the
quantity is in terms of numbers (say 200
Shirts, 1000 pencils etc.)

UCP 600
Art.31 b: B/L with different dates of shipment
(but all consignments going by the same
ship) will not be treated as part shipment.
Art. 31 c: Courier receipts (evidencing
shipment thro courier) bearing same date,
stamp of same post office, same place will
not be treated as part shipment
Art. 33 : Bank has no obligation to accept
presentation of documents outside its
banking hours.

UCP 600
Art. 34 : Bank assumes no liability for

genuineness, falsification or legal effect of

any document.
(Art.14 a : Bank should examine whether
the documents appear, on their face, to be
in terms of LC)
Art.35 : If nominated bank has determined
that documents are in terms of LC and
forwards them to the issuing bank, and
even if such documents are lost in transit,
issuing bank is liable to pay.

UCP 600
Art. 38 d : A transferred LC cannot be transferred

at the request of second beneficiary

Art. 38 c: All charges incurred for transfer should
be borne by first beneficiary (unless otherwise
agreed or mentioned in the LC)
Art.38 (i): First beneficiary has the right to
substitute his own invoice and draft in place of
the documents submitted by second beneficiary
Art.38 k. Second beneficiary should submit
documents to transferring bank only (and not to
LC issuing bank directly)

Regulations / Norms affecting Import L/C

Trade Control (Foreign Trade Policy) Norms

FEMA Rules and RBI Directives
RBI Credit Norms
Banks Internal Guidelines