Basic considerations:
In view of the fact that UCP 600 does not provide full coverage of all the documents that may be required for presentation, an applicant and beneficiary should determine, and agree upon, the documents that are to be presented, the issuer, their data content and time frame for their presentation.
Any ambiguity inherent in the instruction phase is at the responsibility and risk of the applicant. An issuing bank may be required to provide an element of assistance to its client, at the time of completion of the application form, and this should include guidance as to the possible implications of various articles.
An issuing bank may enhance the instructions of an applicant in order that a documentary credit is issued in a form that is deemed workable for each bank and the beneficiary. However, any changes it makes or suggests should be with the full knowledge and agreement of the applicant.
A document to be issued and/or signed by an applicant is often seen as being counter-productive in a documentary credit. Such a condition should only be required with the full agreement and understanding of the beneficiary, i.e., of the possible outcome should a document not be issued or signed as may be expected, or that it is issued at a time that is too late for its presentation under a documentary credit.
General Principles:
A1: Handling abbreviations
Abbreviations are regularly and commonly used in international trade instruments and documentation in substitution for a word or vice-versa.
An abbreviation in a documentary credit allows the use in a document of the same abbreviation, an abbreviation with a similar meaning, or the complete word.
A2: Treatment of virgules and commas
Virgules (usually referred to as a ‘slash' mark) and commas are commonly seen in a documentary credit when describing optional places of receipt or delivery; ports of loading or discharge; or airports of departure or destination. They are also seen with regard to details given in respect of the origin of the goods, or their colour, type or components, etc. It should be made apparent from the terms and conditions of the credit as to whether one or more of the options are possible.
A4: Handling of certificates, Certifications, Declarations or Statements
The basic requirement is that a certificate, certification (subject to ISBP 745, paragraph A5), declaration or statement must be signed, even if a documentary credit is silent in this respect.
A5: Certifications, Declarations or Statements in another document
A certification, declaration or statement that is added to a stipulated document that is already signed and dated, does not require any further dating or signing provided the same entity has provided such dating and signing.
A6: Examination of copy transport documents
When a copy of a transport document is required for presentation in lieu of an original, it is the responsibility of the issuing bank and applicant to ensure that a documentary credit stipulates the terms and conditions that will apply to the examination of that document, otherwise UCP 600 sub-article 14 (f) will be applied due to UCP 600 articles 19-25 only applying to original transport documents.
A7: Handling of corrections and alterations
Corrections and alterations to, and within, documents are a frequent occurrence to ensure a presentation complies under a documentary credit. Apart from drafts (see ISBP 745, paragraph B16) and when a document is to be legalised, visaed, certified etc. there is no necessity for authentication of any correction or alteration of data to a document issued by the beneficiary.
However, when a document issued by the beneficiary, such as an invoice, certificate of origin, etc. has been legalised, visaed and/or certified by an Embassy and/or Chamber of Commerce there is a need for each bank to know that any correction or alteration was made with the knowledge of at least one of these entities. In other words, that the correction or alteration was not made after the completion of the legalisation, visa or certification process.
Corrections and alterations to non-beneficiary issued documents must indicate that the issuer or its agent or proxy made that authentication. A stamp that incorporates the name of the entity and a signature or initials of the official making the authentication can achieve this. Unless the agent or proxy has been identified elsewhere in the document, any authentication by either would also require an indication that they are acting for, or on behalf of, the issuer.
A8: Non-beneficiary documents with more than one correction
The entity that authenticates the correction or alteration i.e., the issuer of the document or an agent or proxy acting for the issuer (and a Chamber of Commerce, Embassy or other similar entity when the document is legalised, visaed or certified) has a choice as to how to indicate such authentication: to provide a separate authentication for each correction or alteration; or to provide one authentication that covers all of the corrections or alterations.
A9: Multiple styles and fonts in a single document
A document may contain data in various type styles, fonts or handwriting. This does not, as a stand-alone, create a discrepancy.
A10: Examination of courier or postal receipts or certificates of posting re documents sent
A documentary credit may include a requirement for a document to be presented that appears to confirm that documents, notices and the like have been sent to an applicant, issuing bank or other entity, by a specific means, or within a specific date or period and for it to be accompanied by a copy of a courier receipt, postal receipt or certificate of posting. Such accompanying documents are not examined under UCP 600 sub-article 14 (f) and not article 25.
For more detailed training material on this subject, refer to the ISBP modules at www.tradefinance.training