We all know that in the international trade of goods and services transactions takes place between the people belonging to different continents, languages, culture, and laws. Since the language used for communication of terms and conditions of LC may suggest different meaning in different parts of the world, people across the world realised the need of uniform rules with standardised words offering the same meaning everywhere for LC transactions. As a result, international chamber of Commerce (ICC) was created in Paris, France in 1919 and its International Court of Arbitration was formed in 1923 to deal with the difficulties in international trade.
Uniform Customs and Practice (UCP) for Documentary Credits is a publication of International Chamber of Commerce (ICC) which is a voluntary code applied by the banks all over the world. Though the drawn-up rules of UCP do not have the binding of law, they have gained almost universal acceptance and are incorporated as a reference in all documentary credits.
The International Chamber of commerce published the first Uniform Customs and Practice for Documentary Credits in 1933 and same was periodically revised 1951, 1962, 1974, 1983, 1993 & 2007. The latest UCP revision is done in July 2007 under publication Number UCP 600 of ICC.
Some of the important interpretations used in UCPDC – 600 are as under.
There are different parties involved in LC mechanism viz. LC applicant (on whose behalf LC is issued), LC issuing bank, the beneficiary of the LC, LC advising bank, LC confirming bank, LC negotiating bank, ‘LC paying bank’ or nominated bank, ‘LC reimbursing bank’. The international commercial terms (INCOTERMS) such as ‘partial shipment’ (multiple sets of B/Ls evidencing different voyages), the ‘latest date of shipment’ (date of shipment will apply only to the transport documents), the ‘expiry date of LC’ (the last date to submit the exported documents with bank for negotiation of documents), means of conveyance or mode of transport, FOB value, CIF value etc. All the above terms are interepreted in UCP.
Click the below links to read related articles
(i) Mechanism of letter of Credit transactions (ii) Folks tangled in issuance of a letter of Credit
(iii) Connotations used in Letter of Credit transactions (iv) All about different kinds of letter of credits
Global issues are problems of economic, environmental, social, and political concerns that affect the entire…
Sustainable development or 'Sustainability for development' refers to the development that is done without damaging…
The Reserve Bank of India today, in its circular informed that during the onsite examination…
Priority Sector lending (PSL) means bank lending to those sectors that the Government of India…
The World Bank was established in 1944 in the name of the International Bank for…
International Monetary Fund (IMF) is an important financial agency of the United Nations and an…