Revised Rules On Letters Of Credit Transactions

The revised rules in letters of credit (LC) contained in UCP 600 and ISBP 2007 took effect on July 1, 2007. The revisions to these rules contain major changes which govern billions of dollars each year in LC transactions. While ISBP alone contain over 200 paragraph guidelines in the review of LC documents, UCP 600 has new provisions that one will need to know among many others:

• A leaner set of rules, with 39 articles rather than UCP 500’s 49
• A replacement of the term "reasonable time" with a definite number of days, for examining and
  determining compliance of documents
• Change practice for notice of refusal and redrafted transport articles
• How the on us is now on the issuer to be precise in their LC terms in order to reduce the element
  of interpretation
• New section, final definitions of key terms (e.g. "honour" and "negotiation")
• An expanded description of “original documents”
• The precise obligation of a confirming bank when the beneficiary has presented their documents
  directly to the issuing bank
• Clarifications on when an amendment to a credit has been accepted and is binding on the
  beneficiary
• Standards for examining documents and data
• Definition of when Incotems 2000 must be reflected in the documents