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Article 1 - Application of UCP

Commentary

Article 1 introduces several changes to the UCP in style and substance related to the applicability of therules.

The article introduces the term rules to refer to the UCP. Previous versions of the article have simply

referred to the UCP. Whilst over the years the UCP have been referred to by practitioners as rules the UCPitself has not previously used this term.

The article also changes the premise that the UCP are effective !hen they are incorporated into the te"t ofthe documentary credit to the concept that they are effective !hen the te"t of the documentary credite"pressly indicates that it is sub#ect to the UCP. A number of $uestions !ere raised concerning the previouslanguage !hen %W&'T !as used to transmit the documentary credit. Unfortunately despite clarifications inthe %W&'T rules the $uestions continued to be posed. (arly in the drafting process the )rafting *roupdecided to change the article to re$uire e"press incorporation and as+ed %W&'T to ma+e changes to itssystem to accommodate this change. These changes have been implemented by %W&'T !ithin the %W&'T,T - -1 and -/ message standards so that the issuing ban+ is able to specifically indicate theapplicability of the rules in the %W&'T message and the documentary credit.

Whilst the UCP no! re$uires an e"press indication that a documentary credit is sub#ect to the rules !here

this e"press indication is not made and an indication of other rules is not present the rules may be appliedas descriptions of custom applicable to documentary credits.

&n many cases in past versions of the UCP the phrase unless other!ise stipulated in the credit or similarphrases !ere used in the articles. The )rafting *roup decided that significant improvements in the style andreadability of the rules could be made by eliminating this phrase throughout the rules. &n order to ma+e thischange it !as decided that article 1 should state that a modification or e"clusion should be e"pressly statedin the documentary credit itself. This inclusion in article 1 means that any article of the rules may bemodified or e"cluded by e"press !ording to that effect or by e"clusion in the documentary credit.

)uring the course of the revision a number of &CC national committees suggested that the reference tostandby letters of credit be deleted from the UCP. Their rationale !as that !ith the introduction of &%P0there !ere no! specific rules for standby credits. After considerable discussion the )rafting *roup felt thatthe reference to standby credits could not be deleted since despite the introduction of &%P0 there !ere

still a significant number of standby credits that continued to be issued sub#ect to the UCP. The )rafting*roup also believed that even if the reference !ere deleted ban+s !ould continue to issue standby creditssub#ect to the UCP.

&n article 1 changes in style have been made to reflect the change in capitali2ation i.e. the term credit isno longer capitali2ed nor are other terms that have been capitali2ed in past versions of the UCP. Changesalso include the inclusion of the publication number and the year of the revision.

Article 2 Definitions

Commentary

(arly in the process of the revision the )rafting *roup decided that as part of the process of simplificationof the rules it !ould be desirable to create one article that contained the definitions of the principal terms

used in the UCP. Article / is this article and it includes all of the significant terms utili2ed in UCP 3. Thee"ception to this is the terms applicable to transferable credits. The )rafting *roup decided that because oftheir uni$ueness the terms specific to transferable credits !ere better contained in the article on transfer.As a result those terms are contained in article 4.

&n addition to the transferable credit terms there are further definitions contained in article 0 5secondadvising ban+6 article 11 5pre7advice6 article 14 5claiming ban+ and reimbursing ban+6 and article 4-5charges6. These definitions !ere retained in the specific articles due to their uni$ue relationship !ith thearticle.

The definitions of many of these terms are not ne! to the UCP have been ta+en from the definitions thate"isted in UCP 8 and do not materially differ from the definitions found there. ,ost have been

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restructured or clarified so that they are complete !hen standing alone and are not part of an article. Anumber of the definitions are ne! and !ere added to aid in the simplification of the articles as a !hole. 'oreasy reference each of the terms is listed belo! !ith a commentary.

Advising ban+

The definition of advising ban+ !as found in UCP 8 in sub7article - 5a6 and !as simply defined by itsusage 9 A Credit may be advised to a :eneficiary through another ban+ 5the ;Advising :an+ ho!ever the practices arebroader than !hat is stated in this publication. Whilst the &%:P publication includes many ban+ing practicesthere are others that are also commonly used in documentary credit transactions beyond those related to

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the e"amination of documents. 'or this reason the definition of complying presentation does not specificallyrefer to the &nternational %tandard :an+ing Practice publication.

Confirmation

UCP 8 contained the definition of the underta+ing of a confirming ban+ in sub7article 0 5b6. The definitionused in UCP 3 states the same principles !hile tying the definition to the UCP 3 defined terms forComplying presentation @onour and ?egotiation.

Confirming ban+

A confirming ban+ in UCP 3 is simply defined as the ban+ that adds its confirmation to a documentarycredit upon the issuing ban+ the concept of revocable documentary credits has been removedfrom UCP 3. The definition lin+s the underta+ing to the definitions of @onour and Complyingpresentation.

@onour

UCP 8 defined the underta+ing under a documentary credit by stating the three methods of fulfilling thatunderta+ing 9 paying at sight paying a deferred payment underta+ing at maturity and accepting a draft andpaying it at maturity. UCP 3 has used a drafting techni$ue to employ a single term honour for thesethree types of availability in order not to repeat them each time they appear in the rules. This techni$ueallo!s the use of the term honour to simplify the te"t. A documentary credit !hen issued !ill state themethod of availability !hich is one of the three options or use a combination of the options 5termed mi"edpayment6 included in the term honour or by indicating that the documentary credit is available bynegotiation.

&ssuing ban+

UCP 8 defined the issuing ban+ in article / simply as the ban+ that issued the documentary credit. UCP3 defines &ssuing ban+ in similar terms meaning the ban+ that issues the documentary credit lin+ingthe issuance to a re$uest of an applicant or to a situation in !hich the documentary credit is issued by theissuing ban+ on its o!n behalf.

)uring the revision process the issue arose as to the handling of documentary credits issued by non7ban+s.&n ctober // the &CC published its pinion B. 88 5!hich is also available on the &CC !ebsite 7!!!.icc!bo.org6 !ith regard to the status of such documentary credits. This pinion !hich is reproducedbelo! as TA 84- has e$ual standing under UCP 3.


Commentary

Article 4 of UCP 3 is a ne! article. The )rafting *roup decided that li+e definitions the UCP !ould besimplified by putting all the concepts that it considered necessary to re$uire interpretation in one article atthe beginning of the rules. (ach interpretation is discussed separately belo!.

%ingular and plural 9 Where applicable !ords in the singular include the plural and in the plural include thesingular.

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Prior to UCP 3 depending on the conte"t terms !ere used in either the singular or plural or !here theycould be used in both conte"ts by including an 5s6 in the term. This usage made for difficult reading. The)rafting *roup decided that the !ording of the rules could be greatly simplified by using the singular andma+ing the statement in the interpretations that !ords in the singular include the plural and in the pluralinclude the singular. Using this concept it is important that terms used in the UCP be read in the conte"t in!hich they are used depending on the specific circumstances involved.

&rrevocability 9 A credit is irrevocable even if there is no indication to that effect.

As used in UCP 3 reference to a documentary credit is al!ays intended to mean an irrevocabledocumentary credit unless the documentary credit itself states other!ise even if the documentary creditdoes not use the term irrevocable. )ue to the limited use of revocable documentary credits today they havebeen removed from UCP 3.

%igned 7 A document may be signed by hand!riting facsimile signature perforated signature stampsymbol or any other mechanical or electronic method of authentication.

This interpretation contains the general interpretation of !hat the terms signed and signature mean inthe conte"t of UCP 3. This interpretation !as contained in UCP 8 sub7article / 5b6.

egali2ation and certification 9 A re$uirement for a document to be legali2ed visaed certified or similar !illbe satisfied by any signature mar+ stamp or label on the document !hich appears to satisfy that

re$uirement.

)ocuments are often re$uired to have some type of certification or legali2ation and this interpretationstates !hat !ill satisfy these re$uirements under the rules. This interpretation !as contained in UCP 8sub7article / 5d6.

:ranches of ban+s 9 :ranches of a ban+ in different countries are considered to be separate ban+s.

&t is often the case that branches of the same ban+ in different countries are involved in the samedocumentary credit transaction. Through the use of the term separate ban+s this interpretation ma+es itclear that for the purpose of these rules these branches of ban+s should be treated as separate ban+s. Theinterpretation contained in UCP 8 article / referred to such ban+s being another ban+. &n the conte"t ofUCP they are not another ban+ but they are a separate ban+ in relation to the functions they may performunder a documentary credit and the UCP.

'rom and after 7 The !ords ;from< and ;after< !hen used to determine a maturity date e"clude the datementioned.

The interpretations of from and after as they specifically relate to maturity dates have been added toUCP 3. This interpretation originally appeared in &%:P Publication 3D8 in paragraph D8 5d6. &t should benoted that the interpretation of from in relation to maturity dates is different from that used in relation toperiods for shipment.

*eneral terminology and e"pressions

The remaining interpretations cover terms that are fre$uently used in documentary credits or documentsand that have not essentially changed from those used in UCP 8. They provide guidance as to ho! the

terms should be treated under the rules !hen used in documentary credit transactions. &n general they areself7e"planatory. These interpretations are listed belo! simply for reference to their e$uivalent in UCP 8.

Terms such as first class !ell +no!n $ualified independent official competent or local used todescribe the issuer of a document allo! any issuer e"cept the beneficiary to issue that document. Thise"planation !as contained in UCP 8 sub7article / 5a6.

Unless re$uired to be used in a document !ords such as prompt immediately or as soon as possible!ill be disregarded. This e"planation !as contained in UCP 8 sub7article D3 5b6 and &%:P publication 3D8paragraph /4.

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The e"pression on or about or similar !ill be interpreted as a stipulation that an event is to occur during aperiod of five calendar days before until five calendar days after the specified date both start and end datesincluded. This e"planation !as contained in UCP 8 sub7article D3 5c6.

The !ords to until till from and bet!een !hen used to determine a period of shipment include thedate or dates mentioned and the !ords before and after e"clude the date mentioned. This e"planation!as contained in UCP 8 sub7article D- 5a6.

The terms first half and second half of a month shall be construed respectively as the 1st to the 18th andthe 13th to the last day of the month all dates inclusive. This e"planation !as contained in UCP 8 sub7article D- 5c6.

The terms beginning middle and end of a month shall be construed respectively as the 1st to the 1ththe 11th to the /th and the /1st to the last day of the month all dates inclusive. This e"planation !ascontained in UCP 8 sub7article D- 5d6.


Commentary

The essence of UCP 8 article 4 has been retained in UCP 3. The changes !ere made to incorporate theuse of the singular and plural as articulated in article 4 as !ell as to incorporate the term honour as no!defined in the rules.

The concept contained in UCP 8 sub7article 85a6 5i6 concerning e"cessive detail has been incorporated intosub7article 5b6 and e"panded. The current !ording is stronger to discourage the incorporation of copies ofcontracts proforma invoices etc. as an integral part of a documentary credit. The )rafting *rouprecogni2ed that there is nothing that can be stated in the rules that !ould prohibit a documentary creditfrom being issued !ith one or more of the attachments mentioned in this sub7article. An advising ban+ canelect not to a advise a documentary credit 5sub7article 0 5e66 and if one or more of these attachments isincluded this may be a reason for such an action. &t should also be noted by applicants that the attaching ofa proforma invoice or contract as an integral part of the documentary credit offers limited protection !ithregard to the goods and their standard or $uality. %uch issues are resolved by re$uiring the necessarydocuments and the data that is to appear therein.


Commentary

%everal small changes have been made in this article. The title of the article has been changed from)ocuments v. *oodsE%ervicesEPerformances to )ocuments v. *oods %ervices or Performance to simplifythe !ording and to delete the use of a virgule 5E6 bet!een !ords.

UCP 8 article D stated= &n Credit operations all parties concerned deal !ith documents F . The )rafting*roup discussed the previous !ording and decided that in fact in documentary credit operations all parties

do not #ust deal !ith documents. The beneficiary of the documentary credit actually deals !ith the goods5services or performance6 and as a result it !as incorrect in the UCP to state that all parties do so. Thearticle !as changed to reflect the fact that ban+s deal !ith documents and not !ith the goods services andperformance to !hich the documents may relate.

To simplify the style in this article as in others the use of virgules has been eliminated and substitutedsimply by the use of or performance


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Commentary

UCP 3 article 3 details the rules for availability of the documentary credit e"piry date and place forpresentation. %ub7article 3 5a6 establishes the rule that a documentary credit must indicate the ban+ !ith!hich it is available or in the case of a freely available documentary credit that it is available !ith any ban+.This sub7article !idens the scope of the previous position in UCP 8 sub7article 1 5b6 5i6 stating that adocumentary credit available by negotiation could be made freely negotiable. Under UCP 3 adocumentary credit can be issued on a freely available basis. %tructured properly a documentary creditcan be made available !ith any ban+ for payment acceptance or deferred payment 9 the three methods

that ma+e up the term honour. %ub7article 5a6 also states the general rule that !hilst a documentary creditmay be made available !ith a nominated ban+ it is al!ays available !ith the issuing ban+. As a result abeneficiary al!ays has the right to present documents either to the nominated ban+ or directly to the issuingban+.

Where UCP 3 article / defines @onour and states the methods of honour sub7article 5b6 ma+es it clearthat all documentary credits must specifically state the method of availability. %ince a documentary creditcannot be made available by honour it must state that it is available either by sight payment deferredpayment acceptance or by negotiation.

UCP 8 sub7articles 0 5a6 5iv6 and 5b6 5iv6 included the principle that documentary credits must not bemade available by drafts dra!n on the applicant. This rule is no! affirmed in UCP 3 sub7article 3 5c6.Whilst UCP 8 said that !hen a draft !as to be dra!n on the applicant it !ould be treated as an additionaldocument this has been deleted from UCP 3 to further reinforce the point that a documentary credit must

not be made available by a draft dra!n on the applicant. &t should not be forgotten that a documentarycredit constitutes an irrevocable underta+ing of a ban+. @aving a documentary credit available by a draftdra!n on the applicant can bring the applicant into the documentary credit settlement process and influencethe point at !hich the issuing ban+

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UCP 3 sub7article - 5a6 is the e$uivalent of UCP 8 sub7articles 0 5a6 5i6 to 5iv6 and has been re!rittendue to the introduction of @onour and to reflect the use of the ne! UCP 3 article / definitions of:eneficiary Complying presentation Credit &ssuing ban+ ?egotiation and ?ominated ban+. Theuse of these definitions has allo!ed the article to become more concise and easier to read.

%ub7article 5a6 states the basic rule that an issuing ban+ it honours by paying at sight accepting adraft dra!n on it and paying at maturity or by incurring a deferred payment underta+ing and paying atmaturity.

%ub7article 5b6 states that the issuing ban+ is irrevocably bound to honour as of the time it issues thedocumentary credit. This !ording is ne! to the UCP. UCP 8 sub7article 0 5d6 5ii6 stated that the issuingban+ !as irrevocably bound as of the time of issuance of an amendment to the documentary credit>ho!ever the UCP did not state specifically that the issuing ban+ !as bound to honour its documentary creditas of the time of issuance.

%ub7article - 5c6 e"pressly recogni2es that an issuing ban+

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obligation. Beimbursement under this sub7article becomes due at maturity in all cases including !henprepayment or purchase has been effected.

%ub7article 5d6 restates the principle contained in the second part of UCP 8 sub7article 0 5d6 5ii6 that aconfirming ban+ may choose not to add its confirmation provided that it informs the issuing ban+ of itsaction and it may advise the documentary credit !ithout confirmation.


Commentary

This ne! article consolidates the concepts of UCP 8 article - and sub7article 11 5b6 into one articlecovering the advice of documentary credits and amendments.

%ub7article 5a6 removes the prior concept of !ithout engagement and replaces it !ith the term !ithoutany underta+ing to better differentiate the underta+ing of the issuing ban+ from the fact that the advisingban+ has no underta+ing to honour or negotiate.

%ub7article 5b6 addresses t!o responsibilities for the advising ban+= first that it has satisfied itself as to theapparent authenticity of the documentary credit or amendment> and second that its advice accuratelyreflects the terms and conditions of the documentary credit or amendment received. UCP 8 used theoften7misunderstood concept that the advising ban+ should e"ercise reasonable care in establishing theapparent authenticity of the documentary credit. :y changing the concept to one !here the advising ban+must satisfy itself as to the apparent authenticity the ne! provision aligns itself more closely !ith thestandard practices of ban+s as to !hat they actually do in authenticating a documentary credit oramendment.

The concept of the advice accurately reflecting the terms and conditions of the documentary credit has beenadded to emphasi2e the responsibility of the advising ban+ for ensuring that the documentary credit oramendment sent to it by the issuing ban+ is accurately advised by it to the second advising ban+ or to thebeneficiary. To satisfy the re$uirement of the advice accurately reflecting the advising ban+ or secondadvising ban+ is responsible for ensuring that !hat is received by it 9 at a minimum the informationpertinent for the beneficiary to perform under the documentary credit 9 is advised to the beneficiary.)ocumentary credits often include information that can be classed as ban+7to7ban+ information such as

refinancing re$uests credit agreements and specific instructions for the nominated ban+. These pieces ofinformation may be e"tracted or deleted from the advice conveyed to the beneficiary.

%ub7article 5c6 introduces the concept of a second advising ban+. Whilst the use of and reference to asecond advising ban+ has been practice for a number of years the UCP never previously ac+no!ledged itsrole. The ne! sub7article states that the second advising ban+ has much the same role as the advising ban+in satisfying itself as to the apparent authenticity of the advice that it has received from the advising ban+and that its advice of the documentary credit or amendment accurately reflects the advice of thedocumentary credit or amendment received from the advising ban+.

UCP 8 stated the principle contained in UCP 3 sub7article 5d6 in UCP 8 sub7article 11 5b6. The rule hasbeen moved to this article so as to include in one place all of the rules related to advising a documentarycredit or amendment. This rule ensures that the chain of communication bet!een the parties !ill bemaintained not only for the advising of the documentary credit but also for any amendments thereto.

%ub7articles 5e6 and 5f6 articulate the same principles contained in UCP 8 sub7articles - 5a6 and 5b6 !henthe advising ban+ or second advising ban+ is unable to satisfy itself as to the apparent authenticity of thedocumentary credit or amendment. Whilst these sub7articles provide for such a ban+ to advise thedocumentary credit or amendment !ithout satisfying itself as to its apparent authenticity most ban+s !illnormally see+ proper authentication from the issuing ban+.


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Commentary

%ub7articles 1 5a6 5b6 and 5c6 contain the concepts of UCP 8 sub7articles 0 5d6 5i6 5ii6 and 5iii6 !ith onlyslight modifications for changes in style and to reflect defined terms.

)uring the course of the revision several options for the determination of acceptance or re#ection ofamendments contained in sub7article 5c6 !ere provided to &CC national committees. These included !hatprobably !ould be the most definitive !ay to determine !hether or not the beneficiary had accepted orre#ected an amendment i.e. that the beneficiary !as re$uired to advise the advising ban+ andEor thenominated ban+ no later than the date of presentation of the documents !hich amendments had beenaccepted or re#ected. These options !ere not accepted in favour of continuing !ith the principles containedin UCP 8 sub7article 0 5d6 5iii6.

%ub7article 5d6 addresses the instance in !hich an advising ban+ or second advising ban+ may receive anotification of acceptance or re#ection on or prior to presentation of the documents and states that theadvising or second advising ban+ should inform the ban+ from !hich it received the amendment of anyacceptance or re#ection received prior to presentation.

The !ording of sub7article 5e6 has been changed from that contained in UCP 8 sub7article 0 5d6 5iv6 toprovide a more definitive statement that partial acceptance !ill be deemed to be a re#ection.

%ub7article 5f6 is ne! to the UCP and addresses the issues contained in Position Paper ?o. 1 issued by &CC in

relation to UCP 8. The position paper addressed the situation in !hich amendments !ere being issuedthat included !ording to the effect that the amendment !ill be deemed to have been accepted by thebeneficiary unless re#ected by it !ithin a specified time period. This practice !as felt to restrict the rights ofa beneficiary in deciding !hen to either accept or re#ect an amendment to a documentary credit. The ne!rule states that such conditions in an amendment !ill be disregarded.

Article 1 1- Application of UCP

Article 11 is essentially the same as UCP 8 sub7articles 11 5a6 and 5c6. UCP 8 sub7article 11 5b6 has no!been moved to UCP 3 sub7article 0 5d6.

%ub7article 5a6 has been modified to state a more definitive rule that an authenticated teletransmission !ill

be deemed to be the operative documentary credit or amendment and should a mail confirmation be sentit !ill be disregarded. &f an issuing ban+ issues a documentary credit on the basis that it is not to be deemedto be the operative documentary credit or amendment then it must clearly indicate this fact by use of!ording such as full details to follo! or similar. When such an advice is issued the issuing ban+ must issuethe operative documentary credit or amendment in terms not inconsistent !ith the teletransmission and!ithout delay.

%ub7article 5b6 has been modified to remove the reference to irrevocable credit since this is no! included inthe definition of Credit in article /.

Cross-references !it"in UCP 6


Commentary

%ub7article 5a6 is similar to UCP 8 sub7article 1 5c6. ?ominating a ban+ to honour or negotiate does notobligate that ban+ to receive or e"amine documents or to honour or negotiate unless the nominated ban+ isthe confirming ban+ of the documentary credit or !hen the nominated ban+ e"pressly communicates itsagreement to honour or negotiate to the beneficiary i.e. by indicating that it is !illing to act under itsnomination. &t should be noted that sub#ect to the structure of the documentary credit a confirming ban+may not be a nominated ban+.

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%ub7article 5b6 is ne! to the UCP. This sub7article provides !ithin the rules that any nominated ban+ isautomatically authori2ed to prepay or purchase a draft accepted by it and to prepay or purchase a deferredpayment underta+ing incurred by it. This provision recogni2es the independent absolute and unconditionalnature of a nominated ban+

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%ub7article 5c6 applies to both sub7article 14 5a6 and 14 5b6 and contains the same principle as in UCP 8namely that an issuing ban+ is not relieved of its obligation to provide reimbursement should thereimbursement not be made by the reimbursing ban+.


Commentary

)uring the course of the revision the )rafting *roup decided that based on the number of $ueries receivedby the :an+ing Commission during the life of UCP 8 further clarification !as needed !ith regard to UCP8 articles 14 5%tandard for ("amination of )ocuments6 and 1D 5)iscrepant )ocuments and ?otice6. As aresult UCP 3 article 1D on %tandard for ("amination of )ocuments introduces a ne! structure by settingthe standards by !hich ban+s should approach the e"amination of documents and has been significantlye"panded to capture the specific re$uirements applicable to all or most documents contained in apresentation. These re$uirements are in addition to those outlined in the specific articles covering transportdocuments insurance documents and commercial invoices.

%ub7article 1D 5a6 establishes the basic rule that the issuing ban+ confirming ban+ if any and a nominatedban+ acting on its nomination must e"amine a presentation based on the documents alone to determine ifon their face they constitute a complying presentation. &t is the e$uivalent of UCP 8 sub7articles 14 5a6

and 1D 5b6. This stance !ithin the UCP has been !ell established and has been modified only slightly toincorporate the UCP 37defined term GComplying presentationG.

Whilst the phrase Gon their faceG continues to remain in this article it has been removed from all otherarticles of UCP 3. The phrase as it is used in relation to the e"amination of documents !as seen to be a!ell7established concept understood by those in the legal profession and e"perienced documentary creditpractitioners. The concept of Gon their faceG does not refer to a simple front versus the bac+ of a documentbut e"tends to the revie! of data !ithin a document in order to determine that a presentation complies !ithinternational standard ban+ing practice and the principles contained in UCP. :ecause the term remained inthe UCP in relation to the e"amination of documents in general the )rafting *roup did not see any reasonto repeat it in other articles such as the transport insurance and commercial invoice articles as !as thecase in UCP 8. :an+s are not obliged to go beyond the face of a document to establish !hether or not adocument complies !ith a re$uirement in a documentary credit or !ith any re$uirement in the UCP.

As a general rule this sub7article applies to the e"amination of all documents presented under a credit.

%ub7article 1D 5a6 differs from UCP 8 article 14 in that as a result of the use of the definition ofGComplying presentationG it re$uires that a presentation comply !ith the terms and conditions of adocumentary credit !hich includes complying !ith the terms of UCP 3 indicated in the documentarycredit !hich in turn includes being in accord !ith international standard ban+ing practice. The re$uirementto use Greasonable careG has been removed and has been superseded by these more comprehensive andprecise re$uirements. This change is prompted also by the progress made since UCP 8 !as published indocumenting international standard ban+ing practice as applied to the e"amination of most documentspresented under documentary credits notably in &CC Publication ?o. 3D8 5/46 and the updated &CCPublication ?o. 31 for use !ith UCP 3.

A nominated ban+ 5that is not obligated as a confirming ban+6 may Gact on its nominationG by e"pressagreement as provided in sub7article 1/ 5a6 or by e"amining the presentation for compliance !ith thedocumentary credit and in most countries charging a fee. Beceipt of documents by a nominated ban+ thathas neither e"pressly agreed to honour nor negotiate a complying presentation nor acted on its nominationconstitutes presentation by the beneficiary under the documentary credit but does not obligate thenominated ban+ to observe the provisions of sub7articles 1D 5a6 or 5b6.

UCP 3 sub7article 1D 5b6 establishes the ma"imum period of time for the e"amination of documents to befive ban+ing days follo!ing the day of presentation in order to determine if a presentation is complying anddiffers in several important respects from UCP 8 sub7article 14 5b6. &n addition to the fact that the timeperiod has been reduced from seven to five ban+ing days follo!ing the day of presentation the reference toGreasonable timeG has been removed. Beference to reasonable time !as removed from UCP 3 due to thelac+ of a standard application of this concept globally. &n fact it !as still the case during the revision processthat a number of ban+s considered a reasonable time to be the full seven ban+ing days follo!ing the day of

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receipt of the documents. The ma#ority of &CC national committees voted for the removal of the reference toGreasonable timeG.

The sub7article no! sets out the period of time as a ma"imum of five ban+ing days follo!ing the day ofpresentation to establish the ma"imum period for determination of compliance. The period of five ban+ingdays follo!ing the day of presentation !as determined follo!ing consultation !ith &CC national committees!hen they !ere as+ed to vote for the applicable number of days ta+ing into consideration that agreementhad already been reached to remove a reference to Greasonable timeG.

The second part of the sub7article is ne! to the UCP and states that the ma"imum period of time fordetermining compliance is not curtailed or affected by the date of e"piry or latest date for presentation ofthe documentary credit falling !ithin this period. :an+s process presentations !ithin the normal flo! ofbusiness transactions and are not responsible for e"pediting e"amination because the documentary credit isabout to e"pire. &t is the responsibility of the beneficiary to ensure that documents are presented insufficient time so that if there are correctable discrepancies it may have the time to correct these and re7present the documents.

%ub7article 5c6 states that if a presentation includes an original transport document 5those sub#ect to thetransport articles of the UCP namely articles 107/86 the default period for presentation is no later than /1calendar days after shipment. This presentation must ho!ever be made no later than the e"piry date of thedocumentary credit. The individual transport articles each contain rules as to !hat is considered to be theshipment date for the specific document. &t is important to note that the sub7article applies only to anoriginal transport document. A presentation !hich only includes a copy of a transport document !ould not

be sub#ect to this rule. %ub7article 5c6 is the e$uivalent of UCP 8 sub7article D4 5a6 and includes &%:PPublication 3D8 paragraph 13. &t !ould be advisable for the applicant in its documentary credit applicationor the issuing ban+ in the issuance of the documentary credit to provide an indication of the number of daysfollo!ing the date of shipment !ithin !hich presentation is to be made rather than relying on a defaultperiod that may not meet the re$uirements of the underlying transaction.

%ub7article 5d6 is the e$uivalent of the second sentence of UCP 8 article /1 and the last sentence of thefirst paragraph of UCP 8 sub7article 14 5a6. The essential concept contained in UCP 8 that data be notinconsistent !ith any other stipulated document has been changed to reflect that the data in a document!hen read in conte"t !ith the documentary credit the document itself and international standard ban+ingpractice does not need to be identical but must not conflict !ith data in the same document any otherstipulated document or the documentary credit. )uring the drafting process the )rafting *roup $uestioned&CC national committees as to the need to revie! data in a document as against data in any other stipulateddocument. The over!helming response from national committees !as to retain this principle in documente"amination.

ver the years the approach by ban+s to documents that may be deemed to be inconsistent !ith oneanother has been proved in many cases to be sub#ect to misuse due to a misinterpretation of the rule.When inconsistencies encompassed issues including simple typing and grammatical errors ban+s fre$uentlycited a significant number of discrepancies. @o!ever calling many of these discrepancies !as oftenun!arranted. The )rafting *roup believed that this concept needed to be changed and felt that the phrasespecifying that data must not Gconflict !ithG !ould be a much narro!er and more preferable concept thanone stating Gdocuments !hich appear on their face to be inconsistent !ithG and !ould re$uire ban+s toma+e a decision based on the compliance of the data itself. The )rafting *roup believes this !ill result in areduction of discrepancies. Conse$uently this ne! standard does not re$uire a mirror image of data.

%ub7article 5d6 also refers to G!hen read in conte"tG as an additional $ualification of Gnot in conflictG. Anumber of $uestions arose during the course of the revision as to the meaning and application of Gnot inconflictG. The re$uirements of the documentary credit the structure and purpose of the document itself andinternational standard ban+ing practice need to be assessed understood and be ta+en into consideration indetermining compliance of a document. 'or e"ample data concerning the consignee in a certificate of originthat differs from the consignee data in the bill of lading !ould not be considered as being in conflict. Theconsignee may !ell be a ban+ that ta+es an interest in the goods as a security for its financing or isindicated as consignee to prevent the applicant from claiming the goods !ithout presentation of an originalbill of lading. The consignee stated in the certificate of origin is there for customs purposes !hereas theconsignee in the bill of lading refers to the function of the document as a document of title. :oth parties arenamed GconsigneeG but serve different purposes for different addressees in the documents.

&n addition the ne! standard of Gnot conflict !ithG relates the data contained in the document to !hat !asre$uired by the documentary credit to !hat is stated in any other stipulated document and to internationalstandard ban+ing practice. &nternational standard ban+ing practice some of !hich is contained in the &%:P

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&CC Publication 31 goes beyond the practices contained in this publication and also includes additionalpractices of the industry that have become standard. These may include practices carried out by documentchec+ers on a daily basis that are not articulated in this publication. &n addition it must be recogni2ed thatthe &%:P does not cover every type of document called for under a documentary credit.

%ub7article 1D 5e6 is the e$uivalent of the second sentence of UCP 8 sub7article 4- 5c6. &t has been movedto this article to be in line !ith the ne! structure introducing one article to describe the standard fore"amination of documents including the re$uirements that apply to all or a number of documents. The sub7article specifically addresses the fact that the description of goods services or performances in documents

other than the commercial invoice may be in general terms as long as it does not conflict !ith thedescription contained in the documentary credit. :y using the !ords Gif statedG it also emphasi2es thatthere is no need for a goods description to appear on every document. This is a clear reference to those &CCnational committees that during the revision process believed that the UCP should include reference tolin+age in the documents !hich included having a goods description on each document presented as one ofthe !ays to achieve Glin+ageG. UCP 3 does not refer to re$uire or imply that lin+age is necessary bet!eenor among documents.

The first sentence of UCP 8 article /1 is no! part of UCP 3 sub7article 1D 5f6. &t contains the additionalstipulation that a document must appear to fulfil the function of the document re$uired by the documentarycredit and other!ise comply !ith UCP 3 sub7article 1D 5d6 regarding conflicting data. This re$uirementmeans that it must be determinable that the document fulfils the intent re$uired. This does not meanho!ever that a document chec+er must have +no!ledge of all of the specific re$uirements for thedocument but rather that he must be able to recogni2e that its intended purpose is that re$uired in the

documentary credit. 'or e"ample a !eight list that does not offer any information as to the !eightobviously !ould not appear to fulfil the function of a !eight list. %imilarly a document that purports to be acertificate of analysis that does not contain any data regarding analysis or reference to the goods beinganaly2ed !ould not appear to fulfil the function of a certificate of analysis.

&t should be remembered that the application of the rule regarding a document fulfilling its function is notlimited to the situation in !hich the documentary credit calls for a document other than transportdocuments insurance documents or commercial invoices !ithout specifying its re$uired content. &temphasi2es that an issuing ban+ has a responsibility to ensure that the documentary credit containssufficient re$uirements in a clear and unambiguous manner for the documents re$uested. &f an applicantre$uests a document as simple as a Gpac+ing listG !ithout further description it must have somee"pectations as to the content of that document. The beneficiary need not elaborate on the re$uiredcontent> it may present a pac+ing list in any form that fulfils the function of a pac+ing list.

UCP 8 sub7article 14 5a6 provided that a document not re$uired under the documentary credit may bereturned to the presenter or passed on !ithout responsibility. %ub7article 5g6 provides a modified e$uivalentrule. The article no! states that in this case the document !ill be disregarded by ban+s and may bereturned to the presenter. Under UCP 8 ban+s !ould return additional documents to a beneficiary and!ere caught up in unnecessary correspondence as to !hy that course of action !as ta+en !hen the UCPallo!ed ban+s to for!ard !ithout responsibility.

%ub7article 5h6 remains the same as it !as in UCP 8 sub7article 14 5c6. %oon after the introduction of UCP8 &CC issued Position Paper ?o. 4 !hich unfortunately introduced ne! issues further confusingpractitioners< understanding of UCP 8 sub7article 14 5c6. )uring the course of the revision the )rafting*roup proposed several alternatives to &CC national committees for the treatment of non7documentaryconditions aimed at a !ording different from that in UCP 8 !hich !ould allo! for a differentinterpretation and application> ho!ever none of these !as considered to be preferable to the e"isting rule.Whilst the language in UCP 3 is basically the same as that in UCP 8 the interpretation of sub7article 1D5h6 should be narro!er than that offered by Position Paper ?o. 4 !hich referred to UCP 8 sub7article 14

5c6 concerning non7documentary conditions and a concept of Glin+ageG. The position under UCP 3 is that ifa documentary credit stipulates a condition !ithout indicating the document re$uired for compliance theban+ should simply treat the condition as if it did not e"ist and disregard it. The data in documents !ill stillbe sub#ect to revie! under sub7article 1D 5d6 to ensure that any data is not conflicting. The issues coveredby sub7article 5h6 can be easily resolved by issuing ban+s< and applicants< ensuring that any term orcondition stated in the documentary credit is clearly lin+ed to a stipulated document. 'or e"ample insteadof G%hipment by conference line vesselG the documentary credit may state G%hipping company certificatestating the goods are shipped on a conference line vesselG or G:ill of lading to indicate shipment byconference line vesselG.

%ub7article 5i6 creates a simple rule stating that a document may be dated prior to the issuance date of thedocumentary credit> ho!ever the document must not be dated later than the date it is presented to the

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ban+. This rule is similar to that contained in UCP 8 article // and see+s to overcome situations in !hichban+s often needlessly refused documents because they !ere dated after the date of shipment. 'ore"ample it is not unusual for an inspection certificate to be dated after the date of shipment. &n itself thisdoes not imply that the goods inspected !ere different from those that !ere shipped. &t merely indicates thedating of the document. Clearly if a document is dated after the date of shipment and states G!e havetoday inspectedG or similar the implication is that different goods !ere inspected and the document !ouldbe discrepant.

Under UCP 8 discrepancies in documents !ere often based on the differences in the addresses of the

applicant and the beneficiary from those stated in the documentary credit. &n practice ho!ever companiesoften have many different offices 5sales offices !arehouses shipping departments etc.6 involved in thee"port or import of goods or services. %ub7article 5#6 states that !here sho!n in documents theseaddresses need not be the same as those stated in the documentary credit provided that they are in thesame country as the respective addresses contained in the documentary credit. The sub7article goes furtherto state that additional contact details as part of the beneficiary

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%ub7article 5c6 addresses a nominated ban+

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%ub7article 5c6 5iii6 lists four options one of !hich must be contained in a ban+ ho!ever it has no obligation to do so.i+e!ise if it does it has no obligation to accept a !aiver it receives from the applicant. &t is sometimes thecase that the issuing ban+ !ill receive instructions from the presenter to handle the documents differentlyprior to receiving a !aiver of discrepancies. %hould this be the case this sub7article gives the option for theissuing ban+ to handle the document in the manner instructed by the presenter based on !hether the!aiver or the instructions are received first. The !ording contained in sub7article 5c6 5iii6 5b6 !ill not be ne!to a large number of documentary credit practitioners. This !ording or !ording of a similar nature !asused in a considerable number of notices of refusal given under UCP 8. The problem !as that the !ordingdid not reflect the options that !ere available under UCP 8 sub7article 1D 5d6 5ii6 i.e. that the documentsare being held at the disposal of or being returned to the presenter. &n reality the !ording that !asincorporated into those notices of refusal reflected the practice of ban+s as opposed to the re$uirements ofUCP 8 sub7article 1D 5d6 5ii6. That practice has no! been recogni2ed and incorporated as one of theoptions available under sub7article 5c6 5iii6.

%ub7article 5c6 5iii6 5d6 addresses the situation in !hich as part of the presentation of the document thepresenter may if there are discrepancies give instructions for handling the documents. &n this case thenotice in addition to stating that the ban+ is refusing to honour or negotiate and listing the specificdiscrepancies may simply state that the ban+ is acting in accordance !ith the instructions previouslyreceived.

%ub7article 5d6 states that the notice re$uired in sub7article 5c6 must be given by telecommunication or othere"peditious means no later than the close of the fifth ban+ing day follo!ing the day of presentation. Thisreflects the reduced time period for giving notice of acceptance or refusal in sub7article 1D 5b6.

When handling discrepant documents it is often the case that the refusal notice is provided and instructionsare sought from the presenter or a !aiver is re$uested but no response is received. %ub7article 5e6 gives aban+ 5a nominated ban+ acting on its nomination a confirming ban+ if any or the issuing ban+6 the optionof simply returning the documents to the presenter. f course this sub7article is sub#ect to the ban+ havingpreviously provided the notice re$uired by sub7article 5c6 5iii6 5a6 or 5b6 as stated in the rule. Thee"pectation although not obligatory is that ban+s !ill give prior notice of the date they !ill return thedocuments rather than ta+ing arbitrary action.

%ub7article 5f6 is the e$uivalent of UCP 8 sub7article 1D 5e6 !hich says that the issuing or confirmingban+ is precluded from claiming that the presentation is non7complying if it fails to act in accordance !iththe article.

%ub7article 5g6 is the e$uivalent of UCP 8 sub7article 1D 5d6 5iii6. When an issuing ban+ or confirming ban+has provided a reimbursement instruction to a nominated ban+ and that nominated ban+ has reimburseditself and !hen the issuing ban+ has subse$uently provided a refusal notice according to article 13 theissuing ban+ !ill be entitled to claim a refund of the reimbursement made plus interest from the time theaccount of the issuing ban+ has been debited until the date refund is made.

UCP 8 sub7article 1D 5f6 relating to negotiation under a reserve or indemnity has not been incorporatedinto UCP 3. The )rafting *roup felt that this sub7article dealt !ith a situation sub#ect to an agreementbet!een a nominated ban+ and the beneficiary and !as not an essential part of the UCP.


Commentary

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&n the late 100s a number of $ueries to the &CC :an+ing Commission and several court cases raised theissue of !hat constitutes an original document under UCP 8 sub7article / 5b6. These issues prompted the&CC :an+ing Commission in Huly 1000 to issue a )ecision on The determination of an ;riginal< document inthe conte"t of UCP 8 sub7Article /5b6. %ince that time no further re$uests for pinions as to !hatconstitutes an original document have been received by &CC.

As a result of the issuance and acceptance of the )ecision on originals the UCP )rafting *roup decided touse the )ecision as the basis for the revision of UCP 8 sub7article / 5b6. UCP 3 sub7articles 1- 5b6 and5c6 reflect the incorporation of the essential positions of the )ecision into UCP 3. Although !ritten under

UCP 8 the )ecision remains valid under UCP 3. The Appendi" to the revised &%:P 5&CC Publication316 !hich brings the &%:P into line !ith UCP 3 includes the )ecision as further guidance on originalsand copies.

Article 1- incorporates the general principles contained in UCP 8 sub7articles / 5b6 and 5c6.

%ub7article 5a6 sets the general rule regarding the presentation of documents and states the position that atleast one original of each document stipulated in the credit must be presented.

%ub7article 5d6 ma+es it clear that the re$uest for a presentation of copies can be satisfied by thepresentation of either originals or copies. Copies !ould include photocopies. Copies of documents need notbe signed. The position regarding copies not re$uiring a signature is also covered in &%:P Publication 31paragraph 4/.

'ollo!ing the logic of sub7article 5a6 sub7article 5e6 refers to and maintains the principle of UCP 8 sub7article / 5c6 5ii6 that !hen the credit calls for the presentation of multiple documents 5in duplicate t!o7fold etc.6 at least one original must be presented. Credits should be precise in their !ording concerning thenumber of originals and copies re$uired to be presented. &f originals and copies are re$uired the credit mustbe specific as to the number of originals and the number of copies re$uired. &f the intention is to onlyre$uire copies of documents then the credit must be precise in its re$uirement for copies.


Commentary

%ub7article 5a6 5iii6 has a ne! re$uirement that the invoice must be made out in the same currency as thecredit reflecting the value of the goods services or performance. &n some countries due to their e"changecontrol re$uirements the invoice may have to sho! a local currency e$uivalent. &f the invoice is made out ina local currency sho!ing an e$uivalent amount in the currency of the credit the invoice !ill be deemed tobe discrepant. @o!ever it !ill be acceptable if the invoice is made out in the same currency as the creditand also sho!s a local currency e$uivalent.

%ub7article 5b6 reflects a change to describe the acceptability by a nominated ban+ a confirming ban+ ifany or the issuing ban+ of a commercial invoice issued for an amount in e"cess of the amount permitted bythe documentary credit provided ban+s do not honour or negotiate for an amount in e"cess of the amountpermitted by the documentary credit. UCP 8 sub7article 4- 5b6 began !ith a negative statement sayingthat unless other!ise stipulated in the credit ban+s may refuse commercial invoices issued for amounts ine"cess of the amount permitted by the credit. This UCP 8 !ording !as considered to implicitly encouragea refusal of documents !hereas in UCP 3 the emphasis is on acceptance supporting the fundamental

idea that the UCP are rules for payment.

The change in the !ording of sub7article 5c6 includes a reference to services or performance reflectingthe position that documentary credits do not only cover the shipment of goods. %imilar to the provision inUCP 8 sub7article 4- 5c6 commercial invoices are re$uired to contain a description of the goods servicesor performance that corresponds !ith the description in the credit. Applying the standard of correspond!ith in this instance has no! become established under international standard ban+ing practice. Thereforethe )rafting *roup sa! no reason to change the current interpretation or construction of this sub7article.


Commentary

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This article applies !hen the documentary credit re$uires presentation of a transport document coveringtransport by more than one mode of transport.

:ecause transport by more than one mode of transport is the more common form in !hich goods aretransported from seller to buyer the )rafting *roup placed this article as the first of the transport documentarticles. :ecause more transport companies see+ to control the entire carriage of a cargo from its place oforigin to the place of its use the rules reflect the increasing importance of a single document covering theentire carriage regardless of !hich mode of transport or means of conveyance is involved during the#ourney. i+e!ise beneficiaries and applicants are interested in having one single counterpart that ta+es

care of the entire carriage rather than having to address different parties for each leg and mode or means ofconveyance used.

The !ording in the title is in contrast to that in the later articles referring to a bill of lading non7negotiablesea !aybill charter party bill of lading etc. since these documents have a traditional bac+ground andhistory lin+ed to their names and are recogni2ed by name by e"porters importers ban+s shippingcompanies and for!arders. A document covering at least t!o different modes of transport is a relativelyne! concept and still lac+s specific name recognition. The rules therefore allo! for a document ho!evernamed that appears to cover transportation by at least t!o different modes of transportation.

The !ording of sub7article 5a6 does not refer to any particular name of a document. Bather it describes the!ay the goods are being moved utili2ing at least t!o different modes of transport for e"ample by truc+ andthen by vessel or rail. There have been so many different names assigned to this type of documentincluding ,ultimodal Transport )ocument Combined Transport :ill of ading &ntermodal Transport

)ocument etc. that the )rafting *roup thought it best to describe !hat happens during the carriage ratherthan to refer to the name or title of a document. Although the !ording in brac+ets refers to a multimodal orcombined transport document this is to indicate lin+s !ith terminology used under UCP 8. The nature ofthe document is a more important consideration than stating a name of the transport document.

Wording to the effect that &f a Credit calls for a transport document covering at least t!o different modes oftransport 5multimodal transport6 ban+s !ill unless other!ise stipulated in the Credit accept a document F!as considered to be unnecessary. &t !as decided that the rules should only stipulate the re$uirementslin+ed to the document rather than referring to !hat ban+s !ill accept if a credit calls for such a document.i+e!ise it !as considered unnecessary to repeat unless other!ise stipulated in the credit since this asindicated earlier in the Commentary is ta+en care of by the general stipulation unless e"pressly modified ore"cluded by the credit in article 1.

As is the case for all other transport documents there is no reference to on its face in this article. The

decision !as made by the )rafting *roup that there should be a reference to on its face or on their facein UCP 3 but that there !as only a need for this to appear in one place sub7article 1D 5a6.

The deletion of or other!ise authenticated authentication and authenticating in relation to the mannerin !hich these transport documents are signed follo!s the principle adopted for all of the transport articles.The interpretation of signing in article 4 covers these situations by including a reference to F any othermechanical or electronic method of authentication.

%ub7article 5a6 5i6 re$uires that the name of the carrier be indicated on the transport document. This can beby a specific reference !ithin the body of the transport document e.g. A:C Co. td the carrier or by the!ay the respective document is signed e.g. 'or A:C Co. td as carrier. The manner of signing describedhere is not e"clusive and !ould include circumstances such as those in !hich a named agent signs for or onbehalf of the InamedJ carrier.

&t should be noted that the manner in !hich transport documents covered by this article indicate the nameof the carrier and are to be signed has not changed bet!een UCP 8 and UCP 3. The only e"ception tothe signing re$uirements occurs !hen the transport document is signed by an agent for or on behalf of themaster. &n this event it is not necessary to state the master

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To ta+e another e"ample !hile it may appear that a transport document issued by a company called A:C%hipping ines td is a document that indicates the name of the carrier unless the !ord carrier appearson the transport document lin+ed to the name of the company the company name in and of itself !ill not besufficient.

%ub7article 5a6 5i6 also goes on to describe !hat is re$uired by !ay of signature. The party signing thetransport document must indicate !hether it is signing as carrier master or agent and if the party is signingas agent the name of that agent must be included as !ell as the capacity in !hich it is signing. Thereforea simple signature on the transport document does not suffice. The indication of the capacity of the one

signing the transport document must also appear in the signature space. @o!ever if the transport documentsho!s the name of the issuing company together !ith the indication carrier a simple signature in thesignature bo" !ith the indication for and on behalf of Iname of the issuing companyJ or for and on behalfof the carrier or a similar indication !ould be sufficient.

The rules re$uire that an agent signing the transport document must indicate !hether it is signing for or onbehalf of the carrier or for or on behalf of the master. The transportation industry pointed out that it is $uitecommon for agents not to +no! the name of the master of a vessel at the time the transport document isissued and therefore the name of the master should not need to be indicated on the transport document.This has been recogni2ed by the rules !hich re$uire that the carrier and a named agent be indicated buthas no such re$uirement for the master a party signing as

,ultimodal Transport perator !as seldom seen.

%ub7article 5a6 5ii6 re$uires that the transport document indicate that the goods have been dispatched ta+enin charge or shipped on board at the place stated in the documentary credit by pre7printed !ording. Thedate of issuance of the transport document !ill be deemed to be the date of shipment. The !ords at theplace stated in the credit have been specifically included to emphasi2e that ban+s must be able todetermine from the transport document not only that the goods !ere dispatched ta+en in charge orshipped on board !ithin the latest shipment date stated in the documentary credit but also that there isevidence that the date of shipment relates to the dispatch ta+ing in charge or shipment from the placestated in the documentary credit and not from any other place of receipt or ta+ing in charge that may beevidenced !ithin the transport document.

%ub7article 5a6 5ii6 also states that an indication of dispatch ta+ing in charge or shipped on board may bedetermined by a stamp or notation indicating the date on !hich the goods have been dispatched ta+en incharge or shipped on board. When the transport document includes a stamp or notation the date sho!ntherein as the date of dispatch ta+ing in charge or shipped on board !ill be deemed to be the date ofshipment !hether or not this date is prior to or after the date of issuance of the transport document.

The transport document must appear to indicate that dispatch ta+ing in charge or shipment has beeneffected from the place stated in the documentary credit to the place of final destination stated in thedocumentary credit even if the transport document sho!s the !ord intended in relation to the vessel portof loading or port of discharge. %ub7article 5a6 5iii6 refers to this.

%ub7article 5a6 5iii6 permits the transport document to indicate other places relating to the #ourney of thegoods prior to the place of dispatch ta+ing in charge or shipment or after the place of final destinationmentioned in the documentary credit. This allo!s a carrier to issue a document !hich covers not only the#ourney foreseen by the documentary credit but the entire #ourney of the goods. 'or e"ample under adocumentary credit that re$uires the transport document to cover shipment from (urope to @ong Nong atransport document sho!ing :ern %!it2erland 9 !hich is not a city providing access to ocean going vessels9 as the place of dispatch or ta+ing in charge ,arseille as the port of loading @ong Nong as the port ofdischarge and %hanghai as place of final destination !ould be acceptable.

%ub7article 5a6 5iv6 continues to stress the UCP 8 position that the transport document must appear to bethe sole original document that has been issued or if it indicates that it has been issued in more than oneoriginal all of the stated originals must be presented unless the documentary credit indicates the disposalinstruction for one or more of the original transport documents.

The transport document usually contains the terms and conditions of carriage. @o!ever as this is not al!aysthe case sub7article 5a6 5v6 allo!s for a transport document to ma+e reference to a source other than thedocument itself to determine these terms and conditions. &n this respect a transport document that contains

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a reference to a source other than itself has generally been described as a short form or blan+ bac+transport document. :an+s are not to e"amine the contents of the terms and conditions of carriage.

%ub7article 5a6 5vi6 stipulates that the transport document must not contain an indication that it is sub#ect toa charter party. The term no indication means that a transport document that bears any indication that itis sub#ect to a charter party !ould not be acceptable under this article. As e"amples of no indication thetransport document may state to be used !ith charter parties or it could contain the follo!ing data=freight payable as per charter party or charter party contract number A:C1/4.

%ince sail boats are rarely if ever used for transportation of goods in international trade it !as decided thata clause prohibiting presentation of a transport document indicating that the carrying vessel is propelled bysail only !as no longer necessary.

%ub7article 5b6 provides a definition of transhipment !hen a transport document covering more than onemode of transport is re$uired.

%ub7article 5c6 5i6 e"plains that transhipment must be evidenced !ithin one and the same transportdocument. %eparate documents covering each leg of a #ourney !ould not be acceptable.

%ub7article 5c6 5ii6 states that transhipment is allo!ed even !hen it is prohibited by the documentary credit.As transhipment al!ays occurs !hen more than one mode of transport is involved this sub7article 5that !asalso included in UCP 86 provides a definitive rule !here a documentary credit inadvertently contains a

condition that transhipment is prohibited.

Article 2- Application of UCP

Commentary

This article applies !hen the documentary credit re$uires presentation of a bill of lading covering transportby sea from one port to another port.

)uring the revision process some &CC national committees pressed for the rules to stipulate that the bill oflading must be a document of title. &n that connection issues !ere raised relating to clauses that began to

appear on bills of lading during /D !hich suggested that carriers had the right to deliver goods coveredby a bill of lading to a consignee they believed to be the rightful o!ner !ithout the bill of lading beingproduced prior to delivery of the goods. The )rafting *roup reached the conclusion that these issues couldnot be addressed in the UCP because it is a legal issue and the UCP are voluntary rules of contract.

Wording to the effect that &f a Credit calls for a bill of lading covering a port7to7port shipment ban+s !illunless other!ise stipulated in the Credit accept a document F !as considered to be unnecessary. &t !asdecided that the rules should only stipulate the re$uirements lin+ed to the document rather than referring to!hat ban+s !ill accept if a credit calls for such a document. i+e!ise it !as considered unnecessary torepeat unless other!ise stipulated in the credit since this as indicated earlier in the Commentary is ta+encare of by the general stipulation unless e"pressly modified or e"cluded by the credit in article 1.

As is the case for all other transport documents there is no reference to on its face in this article. Thedecision !as made by the )rafting *roup that there should be a reference to on its face or on their face

in UCP 3 but that there !as only a need for this to appear in one place sub7article 1D 5a6.

The deletion of or other!ise authenticated authentication and authenticating in relation to the mannerin !hich bills of lading are signed follo!s the principle adopted for all of the transport articles. Theinterpretation of signing in article 4 includes a reference to F any other mechanical or electronic method ofauthentication.

%ub7article 5a6 5i6 re$uires that the name of the carrier be indicated on the bill of lading. This can be by aspecific reference to this capacity !ithin the body of the bill of lading e.g. A:C Co. td the carrier or bythe !ay the respective document is signed e.g. 'or A:C Co. td as carrier. The manner of signingdescribed here is not e"clusive and !ould include circumstances such as those in !hich a named agent signsfor or on behalf of the InamedJ carrier.

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&t should be noted that the manner in !hich bills of lading indicate the name of the carrier and are to besigned has not changed bet!een UCP 8 and UCP 3. The only e"ception to the signing re$uirementsoccurs !hen the bill of lading is signed by an agent for or on behalf of the master. &n this event it is notnecessary to state the master

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deemed to be the date of shipment !hether or not this date is prior to or after the date of issuance of thebill of lading.

When a place of receipt or ta+ing in charge is the same as the port of loading e.g. place of receipt @ongNong CL and port of loading @ong Nong the conclusion given in &CC pinion B.// applies namely Usingyour e"ample !here a place of receipt is given as ;@ong Nong CL< and the port of loading is sho!n as ;@ongNong

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%ince sail boats are rarely if ever used for transportation of goods in international trade it !as decided thata clause prohibiting presentation of a bill of lading indicating that the carrying vessel is propelled by sail only!as no longer necessary.

%ub7article 5b6 provides a definition of transhipment !hen a bill of lading is re$uired.

%ub7article 5c6 5i6 e"plains that transhipment must be evidenced !ithin one and the same bill of lading.%eparate documents covering each leg of a #ourney !ould not be acceptable.

%ub7article 5c6 5ii6 recogni2es the shipping industry practice that transhipment often occurs !hen goods areshipped in containers trailers or A%@ barges by stating that this is allo!ed even if prohibited by thedocumentary credit. The only !ay that an applicant can completely prohibit transhipment !ould be to statethat transhipment is prohibited and that sub7article / 5c6 5ii6 is not applicable or is e"cluded.

%ub7article 5d6 recogni2es that a statement on a bill of lading indicating that the carrier reserves the right todo something in this case tranship does not imply that it has or !ill do so and is an acceptable condition.


Commentary

This article applies !hen the documentary credit re$uires presentation of a non7negotiable sea !aybillcovering transport by sea from one port to another port.

)uring the revision process the )rafting *roup compared the content of UCP 8 articles /4 and /D. Thecomparison highlighted !hat !e all +ne! namely that there !as no difference in the !ording e"cept that!henever the !ords bill of lading appeared in article /4 the !ords non7negotiable sea !aybill appearedin article /D. At one point the )rafting *roup combined the t!o articles into one. @o!ever responses from&CC national committees asserted that it !as un!ise to combine in one article of the rules a document !hichis in most cases a negotiable document 5the bill of lading6 and on the other hand a document !hich bearsin its title !ords to the effect that it is non7negotiable 5the non7negotiable sea !aybill6. The decision !asthen ta+en to remain !ith !hat e"isted under UCP 8 and to have a separate article for the non7negotiablesea !aybill.

Wording to the effect that &f a Credit calls for a non7negotiable sea !aybill covering a port7to7portshipment ban+s !ill unless other!ise stipulated in the Credit accept a document F !as considered to beunnecessary. &t !as decided that the rules should only stipulate the re$uirements lin+ed to the documentrather than referring to !hat ban+s !ill accept if a credit calls for such a document. i+e!ise it !asconsidered unnecessary to repeat unless other!ise stipulated in the credit since this as indicated earlierin the Commentary is ta+en care of by the general stipulation unless e"pressly modified or e"cluded by thecredit in article 1.

As is the case for all other transport documents there is no reference to on its face in this article. Thedecision !as made by the )rafting *roup that there should be a reference to on its face or on their facein UCP 3 but that there !as only a need for this to appear in one place sub7article 1D 5a6.

The deletion of or other!ise authenticated authentication and authenticating in relation to the manner

in !hich non7negotiable sea !aybills are signed follo!s the principle adopted for all of the transport articles.The interpretation of signing in article 4 includes a reference to F any other mechanical or electronicmethod of authentication.

%ub7article 5a6 5i6 re$uires that the name of the carrier be indicated on the non7negotiable sea !aybill. Thiscan be by a specific reference !ithin the body of the non7negotiable sea !aybill e.g. A:C Co. td thecarrier or by the !ay the respective document is signed e.g. 'or A:C Co. td as carrier. The manner ofsigning described here is not e"clusive and !ould include circumstances such as those in !hich a namedagent signs for or on behalf of the InamedJ carrier.

&t should be noted that the manner in !hich non7negotiable sea !aybills indicate the name of the carrierand are to be signed has not changed bet!een UCP 8 and UCP 3. The only e"ception to the signing

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re$uirements occurs !hen the non7negotiable sea !aybill is signed by an agent for or on behalf of themaster. &n this event the master

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%ince sail boats are rarely if ever used for transportation of goods in international trade it !as decided thata clause prohibiting presentation of a non7negotiable sea !aybill indicating that the carrying vessel ispropelled by sail only !as no longer necessary.

%ub7article 5b6 provides a definition of transhipment !hen a non7negotiable sea !aybill is re$uired.

%ub7article 5c6 5i6 e"plains that transhipment must be evidenced !ithin one and the same non7negotiablesea !aybill. %eparate documents covering each leg of a #ourney !ould not be acceptable.

%ub7article 5c6 5ii6 recogni2es the shipping industry practice that transhipment often occurs !hen goods areshipped in containers trailers or A%@ barges by stating that this is allo!ed even if prohibited by thedocumentary credit. The only !ay that an applicant can completely prohibit transhipment !ould be to statethat transhipment is prohibited and that sub7article /1 5c6 5ii6 is not applicable or is e"cluded.

%ub7article 5d6 recogni2es that a statement on a non7negotiable sea !aybill indicating that the carrierreserves the right to do something in this case tranship does not imply that it has or !ill do so and is anacceptable condition.


Commentary

This article applies !hen the documentary credit re$uires or permits presentation of a charter party bill oflading and a charter party bill of lading is presented. A charter party bill of lading is a bill of lading containingan indication that it is sub#ect to a charter party.

Wording to the effect that &f a Credit calls for or permits a charter party bill of lading ban+s !ill unlessother!ise stipulated in the Credit accept a document F !as considered to be unnecessary. &t !as decidedthat the rules should only stipulate the re$uirements lin+ed to the document rather than referring to !hatban+s !ill accept if a credit calls for such a document. i+e!ise it !as considered unnecessary to repeatunless other!ise stipulated in the credit since this as indicated earlier in the Commentary is ta+en careof by the general stipulation unless e"pressly modified or e"cluded by the credit in article 1.


The deletion of or other!ise authenticated authentication and authenticating in relation to the mannerin !hich charter party bills of lading are signed follo!s the principle adopted for all of the transport articles.The interpretation of signing in article 4 includes a reference to F any other mechanical or electronicmethod of authentication.

%ub7article 5a6 5i6 outlines the signing re$uirements for a charter party bill of lading indicating that it maybe signed by the master the o!ner or the charterer or an agent of the master the o!ner or the charterer. &fthe charter party bill of lading is signed by the master o!ner or charterer the signature must be identifiableas that of one of these parties. &f signed by an agent that agent

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&n any event !hether or not the charter party bill of lading includes the name of the carrier has no effect indetermining compliance of the document !ith the documentary credit or UCP 3.

The term charterer !as included at the re$uest of the &CC Transport Commission !hose members notedthat it is a gro!ing practice for charterers to either sign or become involved in the creation of charter partybills of lading.

%imilar to other transport articles involving transportation by sea sub7article 5a6 5ii6 re$uires that thecharter party bill of lading indicate that the goods have been shipped on board a named vessel at the port ofloading stated in the documentary credit. The shipped on board date !ill be deemed to be the date ofshipment. The !ords at the port of loading stated in the credit have been specifically included toemphasi2e that ban+s must be able to determine from the charter party bill of lading not only that thegoods !ere shipped !ithin the latest shipment date stated in the documentary credit but also that there isevidence that the date of shipment relates to shipment from the port of loading stated in the documentarycredit and not from any other place of receipt or ta+ing in charge evidenced !ithin the charter party bill oflading.

%ub7article 5a6 5ii6 also describes the manner in !hich ban+s !ill determine that the goods have beenshipped on board i.e. by pre7printed !ording or by an on board notation. When the charter party bill oflading includes an on board notation the date of the on board notation !ill be deemed to be the date ofshipment !hether or not this date is prior to or after the date of issuance of the charter party bill of lading.

The charter party bill of lading must appear to indicate that shipment has been effected from the port of

loading to the port of discharge as stated in the documentary credit. %ub7article 5a6 5iii6 refers to this.

Becogni2ing there is a difference bet!een transportation under charter party contracts and by liner vesselsit !as decided that !hilst the charter party bill of lading must sho! a named port or ports of loading andport or ports of discharge it is acceptable if it sho!s the port or ports of discharge e"actly as stated in thedocumentary credit even if the documentary credit sho!s a range of ports or geographical area as there$uired port of discharge e.g. any Chinese port.

%ub7article 5a6 5iv6 continues to stress the UCP 8 position that the charter party bill of lading must appearto be the sole original charter party bill of lading that has been issued or if it indicates that it has beenissued in more than one original all of the stated originals must be presented unless the documentary creditindicates the disposal instruction for one or more of the original charter party bills of lading.

%ince sail boats are rarely if ever used for transportation of goods in international trade it !as decided thata clause prohibiting presentation of a charter party bill of lading indicating that the carrying vessel ispropelled by sail only !as no longer necessary.

%ub7article 5b6 states that ban+s should continue to discourage any re$uirement for presentation of acharter party contract under a documentary credit.


Commentary

This article applies !hen the documentary credit re$uires the presentation of an air transport documente.g. an air consignment note or air !aybill.

Wording to the effect that &f a Credit calls for an air transport document ban+s !ill unless other!isestipulated in the Credit accept a document F !as considered to be unnecessary. &t !as decided that therules should only stipulate the re$uirements lin+ed to the document rather than referring to !hat ban+s !illaccept if a credit calls for such a document. i+e!ise it !as considered unnecessary to repeat unlessother!ise stipulated in the credit since this as indicated earlier in the Commentary is ta+en care of by thegeneral stipulation unless e"pressly modified or e"cluded by the credit in article 1.

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The deletion of or other!ise authenticated authentication and authenticating in relation to the mannerin !hich air transport documents are signed follo!s the principle adopted for all of the transport articles. Theinterpretation of signing in article 4 includes a reference to F any other mechanical or electronic method ofauthentication.

%ub7article 5a6 5i6 re$uires that the name of the carrier be indicated on the air transport document. This canbe by a specific reference to this capacity !ithin the body of the air transport document e.g. A:C Co. tdthe carrier or by the !ay the respective document is signed e.g. 'or A:C Co. td as carrier. The mannerof signing described here is not e"clusive and !ould include circumstances such as those in !hich a namedagent signs for or on behalf of the InamedJ carrier.

&t should be noted that the manner in !hich air transport documents indicate the name of the carrier andare to be signed has not changed bet!een UCP 8 and UCP 3.

%ub7article 5a6 5ii6 repeats the UCP 8 position that the air transport document must indicate that thegoods have been accepted for carriage.

The )rafting *roup could not thin+ of any reason !hy a separate notation of a date of dispatch should only

override the issuance date !hen a separate notation is called for by the documentary credit as !as the caseunder UCP 8.

Therefore as stated in sub7article 5a6 5iii6 a notation of the actual date of dispatch !ill be ta+en to be thedate of shipment !hether or not such notation is called for in the documentary credit. &n the absence of anotation and !here the documentary credit does not re$uest a notation of the actual date of dispatch thedate of issuance of the air transport document !ill be ta+en to be the date of shipment. A notation could bea stamp or a specifically designated area !ithin the document. The completion of any other pre7printed bo"or field on an air transport document !ith a flight number and date does not constitute a notation for thepurpose of determining the date of shipment.

UCP 8 sub7article /- 5a6 5iii6 stated that information contained in the bo" designated 'or Carrier Usenly should be disregarded in determining the date of shipment. Under sub7article 5a6 5iii6 it should benoted that any information concerning the flight date including a notation as described above !ill be

disregarded for the purpose of determining the date of shipment.

The air transport document must appear to indicate that dispatch has been effected from the airport ofdeparture to the airport of destination as stated in the documentary credit. %ub7article 5a6 5iv6 refers to this.

%ub7article 5a6 5v6 states that a presentation must include an original air transport document that appears tobe the one for the consignor or shipper. A documentary credit should not call for a full set of original airtransport documents as this +ind of document is not issued in this manner. A re$uest for a full set !ill befulfilled by the presentation of an original for consignor or shipper.

The air transport document usually contains the terms and conditions of carriage. @o!ever as this is notal!ays the case sub7article 5a6 5v6 allo!s for an air transport document to ma+e reference to a source otherthan the document itself to determine these terms and conditions. :an+s are not to e"amine the contents ofthe terms and conditions of carriage.

%ub7article 5b6 provides a definition of transhipment !hen an air transport document is re$uired.

%ub7article 5c6 5i6 e"plains that transhipment must be evidenced !ithin one and the same air transportdocument. %eparate documents covering each leg of a #ourney !ould not be acceptable.

%ub7article 5c6 5ii6 recogni2es the air transport industry practice that transhipment often occurs in airtransport by stating that this is allo!ed even if prohibited by the documentary credit. The only !ay that anapplicant can completely prohibit transhipment !ould be to state that transhipment is prohibited and thatsub7article /4 5c6 5ii6 is not applicable or is e"cluded.

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Commentary

This article applies !hen the documentary credit re$uires the presentation of road rail or inland !ater!aytransport documents.

The transport documents covered by this article are not e"clusively sub#ect to international legislationconstruction or content. 'or e"ample !hilst in (urope a C,B transport document !ill usually be issuedcovering road transport in other parts of the !orld such a road transport document can be issued solely onthe letterhead of a freight for!arder or truc+ing company.

Wording to the effect that &f a Credit calls for a road rail or inland !ater!ay transport document ban+s!ill unless other!ise stipulated in the Credit accept a document F !as considered to be unnecessary. &t!as decided that the rules should only stipulate the re$uirements lin+ed to the document rather thanreferring to !hat ban+s !ill accept if a credit calls for such a document. i+e!ise it !as consideredunnecessary to repeat unless other!ise stipulated in the credit since this as indicated earlier in theCommentary is ta+en care of by the general stipulation unless e"pressly modified or e"cluded by thecredit in article 1.


The deletion of or other!ise authenticated authentication and authenticating in relation to the mannerin !hich these documents are signed follo!s the principle adopted for all of the transport articles. Theinterpretation of signing in article 4 includes a reference to F any other mechanical or electronic method ofauthentication.

%ub7article 5a6 5i6 re$uires that the name of the carrier be indicated on the transport document. This can beby a specific reference to this capacity !ithin the body of the transport document e.g. A:C Co. td thecarrier or by the !ay the respective document is signed e.g. 'or A:C Co. td as carrier. The manner ofsigning described here is not e"clusive and !ould include circumstances such as those in !hich a namedagent signs for or on behalf of the InamedJ carrier.

&t should be noted that the manner in !hich these transport documents indicate the name of the carrier andare to be signed has not changed bet!een UCP 8 and UCP 3.

&n recognition of transport industry practice for the issuance of rail !aybills an e"ception has been made fora rail !aybill to be accepted bearing any signature or stamp !hich appears to be that of a rail!ay companyas evidence of one being signed by the carrier. ther!ise the transport document must either be signed bythe carrier or a named agent of the carrier or evidence the receipt of the goods by the carrier or agent by astamp or a notation al!ays indicating the capacity of the carrier or the agent as the case may be.

The change in !ording appearing in sub7article 5a6 5ii6 reflects the manner other than a date of issuance ofthe transport document in !hich shipment may be evidenced across the three modes of transport coveredby this article.

The same sub7article reflects a similar position for road rail or inland !ater!ay documents as the one thatappears in sub7article /4 5a6 5iii6 covering air transport documents i.e. that the date of issuance !ill bedeemed to be the date of shipment unless in the case of this article there is a dated reception stamp dateof receipt or date of shipment appearing on the transport document.

The transport document must appear to indicate that shipment dispatch or carriage has been effected fromthe place of shipment to the place of destination as stated in the documentary credit. %ub7article 5a6 5iii6refers to this.

ne of the criticisms of UCP 8 article / 9 and !hy a number of &CC national committees re$uested thatthis article be split into three separate articles 9 !as that the rules !ere applicable to all three types of

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transport and there !ere no variations according to the mode of transport used. This has been rectified inthis article. %ub7article 5b6 contains provisions applicable to one or more modes of transport. The provisionsreflect transport industry practice !ith regard to road rail or inland !ater!ay and in some cases sho!s thedifferent treatment that each receives as a result of these practices.

'or e"ample even if there is no i

Commentry 600

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Transcript of Commentry 600