Saturday, May 21, 2011

Uniform Customs and Practice for Documentary Credits

In order to prevent misinterpretations, misunderstanding and other associated problems connected with the interpretation of trade terms, phrases and divergences in customs and practice in the international trade, the International Chamber of Commerce (ICC) has come out with a standard set of rules and interpretations known as the Uniform Customs and Practice for Documentary Credits, Publications No. 500 (in short UCP No. 500).

Briefly, the UCP No. 500 sets out universally accepted procedures, liabilities, responsibilities and various terms and conditions and their respective interpretations connected with international trade.

The UCP has been adopted practically by every nation in the world. Although the UCP generally does not have the force of law, their provisions are binding on the relevant parties who had adopted them.

Thus, as a requirement, every application and documentary credit and amendment have to bear the words, "Subject to Uniform Customs and Practice for Documentary Credits, 1994 Revision, ICC Publication No. 500" or words to that effect.

Needless to say, every importer, exporter and banker should possess a copy of this important publication for their due references for their practical handling of such order.