NEW
UCP-MASALA WILL MAKE LC -CURRY
MORE SALEABLE
IN TRANSITIONAL AND DEVELOPING
ECONOMIES
By
Ravi
Mehta,
Ph.D.
[LC VIEWS Newsletter
N0.82; January 2007]
|
Masala
– a varying blend of spices used in Indian cooking |
|
Curry – a
food in Indian cuisine seasoned with a mixture of pungent spices |
Merriam-Webster’s Collegiate Dictionary
There are
3 essential ingredients, called 3S, in
new UCP-masala, called UCP 600, which will
help LC-curry, a banking food, sell fast, and more and more in the
LC markets of transitional and developing economies, which need LC-based
international trade as it is considered the best way to economic
development. The ingredients are:
. Simplification
. Specification
. Standardization elaboration
Simplification
New UCP
is simple. Language is simple. Easy to understand.
Easy to apply. New UCP does not say anywhere
the annoying words “unless otherwise stipulated in the credit” as old UCP
says again and again here and there. It does not repeat the vexing words
“appear(s) on its/their face”, “notwithstanding”, which old UCP –UCP 500 –
speaks. “Inconsistent” word in UCP 500 is replaced by the popular word
“conflicting” in UCP 600. “If terms and conditions are complied with” –
these tongue twisting words are replaced by pleasant words “if
presentation is complying”. Simplification will turn reluctance with
enthusiasm for use of UCP. It will help eliminate UCP-illiteracy. New UCP
is linguistically better and hence practically better.
Specification
New UCP
is clear. No vague terms. For example, “reasonable time” is replaced with
“definite time”. Negotiation is defined and the new definition is clear
and purposeful. Definitions (article 2) and interpretations (article 3)
are the best examples of specification. They could be, therefore, very
helpful in:
. LC
terms negotiation as part of sales contract negotiation.
. LC
examination
.
Documentation
. Document
examination
.
Dispute
management.
We need
authoritative interpretations. And, new UCP provides. Lack of
specification means presence of confusion and controversy. There is a
scope for manipulation when there is confusion. A confusing UCP is a
trade barrier. UCP 600 is better.
Let us
checklist new UCP’s interpretations for ready
reference:
. Where applicable, words in the singular include plural and in the plural
include singular.
.
A credit is
irrevocable
even if there is no indication to that effect.
This will help in LC examination.
. A document may be signed by handwriting, facsimile signature, perforated
signature, stamp, symbol or any other mechanical or electronic method of
authentication.
This will help in document preparation.
. A requirement for a document to be legalized,
visaed, certified or similar will be satisfied by any signature,
mark, stamp or label on the document which appears to satisfy that
requirement.
. Branches of a bank in different countries are considered to be separate
banks.
This will help in LC terms negotiation.
. Terms such as “first class”, “well known”, “qualified”, “independent”,
“official”, “competent” or “local” used to describe the issuer of a
document allow any issuer
except the beneficiary
to issue that document.
. Unless required to be used in a document, words such as “prompt”,
“immediately” or “as soon as possible” will be
disregarded.
. The expression “on or about” or similar will be interpreted as a
stipulation that any event is to occur during a period of
five calendar days
before until five calendar days after the specific date, both start and
end dates included.
. The words “to”, “until”, “from” and ‘‘between” when used to determine a
period of shipment
include
the date or dates mentioned, and the words “before” and “after”
exclude
the date mentioned.
. The words “from” and “after” when used to determine a maturity date
exclude
the date mentioned.
. The terms “first half” and “second half” of a month shall be construed
respectively as the 1st to the 15th and the 16th
to the last day of the month, all dates inclusive.
. The terms “beginning”, “middle” and ‘end” of a month shall be construed
respectively as 1st to the 10th , the 11th to the 20th
and the 21st to the last day of the month, all dates inclusive.
Standardization elaboration
New UCP in article 14 further standardizes banking practice of document
examination. Now it is clearer for the banker what to accept, what to
disregard.
The new standardization is elaboration, exemplification and specification.
Elaboration and illustration of standard will help improve examination and
make it controversy-free.
Article 14 says:
Compliance determination only on the basis of presented documents alone
a. A nominated bank acting
on its nomination, a confirming bank, if any, and the issuing bank must
examine a presentation to determine,
on the basis of the documents alone,
whether not the documents appear on their face to constitute a complying
presentation.
5-day period for examination
b. A nominated bank acting
on its nomination, a confirming bank, if any, and the issuing bank shall
each have
a maximum of
five
banking days
following the day of presentation to determine if presentation is
complying. This period is not curtailed or otherwise affected by the
occurrence on or after the date of presentation of any expiry date or last
day for presentation.
Presentation time after the shipment
c. A presentation including one or more original transport documents
subject to articles 19, 20, 21, 22, 23, 24 or 25 must be made by or on
behalf of the beneficiary
not later than 21 calendar days
after the date of shipment as described in these rules, but in any event
not later than the expiry date of the credit.
Data examination
d. Data in a document, when read in context with the credit, the document
itself and international standard banking practice,
need not be identical to, but must not conflict with,
data in that document, any other stipulated document or the credit.
Goods description examination
e.
In documents other than the commercial invoice, the description of the
goods, services or performance, if states, may be
in general terms
not conflicting
with their description in the credit.
Other documents
f. If a credit requires presentation of a document other than a transport
document, insurance document or commercial invoice, without stipulating by
whom the document is to be issued or its data content, banks will accept
the document as presented if its content appears to fulfill the function
of the required document and otherwise complies with sub-article 14 (d).
Presented but not required
g. A document presented but not required the credit will be disregarded
and may be presented to the presenter.
Non-documentary condition
h. If a credit contains a condition without stipulating the document to
indicate compliance with the condition, banks will deem such condition as
not stated and will disregard it.
Pre-dated document
i.
A document may be dated prior to the issuance date of the credit, but must
not be dated later than its date of presentation.
Addressing the address problem
j. When the address of the beneficiary and the applicant appear in any
stipulated document, they need not be the same as those stated in the
credit or in any other stipulated document, but must be within the same
country as the respective addresses mentioned in the credit. Contact
details (telefax, telephone, email and the
like) stated as part of the beneficiary’s and the applicant’s address will
be disregarded. However, when the address and contact details of the
applicant appear as part of the consignee or notify party details on a
transport document subject to articles 19, 20, 21, 22,23, 24 or 25, they
must be stated as in the credit.
Shipper vs. beneficiary
k. The shipper or consignor of the goods indicated on any document need
not be the beneficiary of the credit.
Transport document issuer
l. A transport document may be issued by any party other than a carrier,
owner, master or charterer provided that the
transport document meets the requirements of articles 19, 20,21,22,23 0r
24 of these rules.
Conclusion
UCP understanding if error-free
Documentation is error-free
Examination is controversy-free
LC payment is hassle-free
