UCP 290 sub-article 8 (d) and UCP 400 sub-article 16 (c) provided for an issuing bank to have a ‘reasonable time' to examine documents.
This was expanded in UCP 500 sub-article 13 (b) to apply to the issuing bank, the confirming bank, if any, or a nominated bank acting on their behalf. Another key differentiator was that the period of reasonable time was not to exceed seven banking days following the day of receipt of the documents.
UCP 600 sub-article 14 (b) no longer refers to a reasonable time and limits the examination period to a maximum of five banking days following the day of presentation.
According to the ‘Commentary on UCP 600' (ICC Publication No. 680) reference to reasonable time was removed due to the lack of a standard application of the concept globally. This does not, however, mean that the principle of reasonableness has entirely disappeared. Banks still need to be reasonable in the time taken to examine documents. For example, taking five banking days to examine a presentation consisting of a relatively few number of documents may not be considered as reasonable under the applicable law.
Whilst, based on UCP alone, there may be no consequence for a bank that consistently takes the maximum period to examine documents, a presenter faced with a slow handling procedure on a regular basis may seek to avoid using that bank in the future. Competition is likely to be the force behind what can be considered as reasonable. In actual fact, many banks these days will examine documents on the day of receipt for prime clients, and aim to complete examination of all presentations within 24 hours, or 48 hours latest. Some banks advertise this fact in their advice of the letter of credit.
Obviously, there will be exceptions and particularly large or complex presentations can require the full period of five banking days - however, this is a rarity.
Banks are expected to work diligently and in a professional manner - this is how reasonable time is widely judged.
Various DOCDEX decisions have referred to ‘reasonable time'.
Decisions 244, 248, 255, 258 and 271 under UCP 500 did not determine that the time taken was unreasonable.
In Decision 276 under UCP 600, the issuing entity had failed to comply with the applicable provisions of UCP and was precluded from claiming that the documents did not constitute a complying presentation.