| PACKING LIST
OF THE JIA HAO TIPS
In my opinion parties involved in letters of credit
operations should have knowledge of UCP, but to different extent and with
different focus. So with the coming of UCP600, I would like to give some
tips to beneficiary, bankers and applicant, for drawing their attention to
some key differences between UCP600 UCP 500 to understand the essentials of
UCP 600.
For beneficiary:
1. Different from UCP500, the beneficiary cannot
ignore and disregard the term "prompt", "immediately" or "as soon as
possible" in any event. When they are required to be used in a document,
they should be still complied with accordingly.
2. Under UCP600 the beneficiary
can be entitled to claim a defense against the advising bank who fails to
accurately advice the terms and conditions of the credit.
3. The beneficiary may wait for a maximum of five
banking days to receive bank’s payment or refusal regardless whether the
period taken by the bank is reasonable. But beyond the maximum period of
five banking days he may be entitled to claim that the bank has not acted
according to UCP600 stipulations.
4. The address of the beneficiary or the applicant
need not be mentioned as same as that stated in the credit, unless the
credit so required. But when showing the address of the consignee in
bills of lading, the address should be same as that stated in the credit.
5. Quite different from UCP500, although having
refused documents and stated holding documents at the beneficiary’s disposal,
the issuing bank may release the documents to the applicant unless it
receives contrary instructions from the beneficiary before. So in this
connection, if the beneficiary intends to exercise full control of the
disposal of the documents, it had better clearly state in the covering
letter for presentation that the documents should not be released to the
applicant after they are refused. In this way the issuing bank will follow
such instruction and may not release the documents to the applicant without
the beneficiary’s further instruction.
6. Charter party bills of lading may be signed by
charterer or its agent other than master, ship owner and their agents.
7. When an agent for the master signs bills of
lading, the master’s name need not be indicated.
8. AWB must be indicate the date of issuance. When
there is a special notation regarding the dispatch date/flight date, such a
date in the notation will be deemed as shipment date regardless of whether
the credit requires the AWB presented show such dispatch date/flight date.
9. A transport document may bear a reference, by
stamp or otherwise, to charges additional to the freight, even though such
charges are not in connection with loading, unloading or similar operations.
10. Insurance documents may be signed by the proxy
of the insurer or underwriter.
11. Any exclusion clause appeared in insurance
documents may be acceptable.
12. The second beneficiary under a transfer of
credit must present documents to the transferring bank, that is,
bypassing of the transferring bank is prohibited.
13. According to ISBP subject to UCP600, when the
issuing bank refuses documents and later accepts them under an xxx days
sight credit, the maturity date shall be calculated from the date of refusal
of documents. This stipulation is more beneficial to
the beneficiary.
For applicant:
1. When applying for issuing a credit, the applicant
should instruct clearly the specific version of UCP which the credit shall
be subject to. When UCP600 becomes effective, banks will issue credits
subject to UCP600 unless the applicant otherwise expressly instructed by the
applicant.
2. If the applicant wants to override some
stipulations of UCP600, it must expressly exclude or modify such
stipulations. However, the express exclusion is not limited to the
expression, e.g. “UCP Article xxx is excluded/modified as …….”
3. If the applicant intends to require the
beneficiary’s or its address be indicated in a document, e.g. invoice, it
should expressly so stipulate in the credit. Otherwise the addresses need
not be indicated and even indicated need not be same as those stated in the
credit.
4. Although article 12 of UCP500 is deleted in
UCP600, it does not signify that the requirement for instruction’s
completeness and clearness is waived. The applicant’s instructions of
issuing a credit should still be complete and explicit.
5. When no transport documents subject to UCP600 are
required or no original transport documents are required, if the applicant
intends to stipulate a presentation period, the starting date for
calculation should be clearly stipulated in the credit.
6. When the applicant requires multimodal transport
documents, he should not prohibit transshipment.
To issuing bank/confirming
bank:
They should understand every difference between
UCP500 and UCP600, especially the following:
1. The issuing bank must pay against “complying
presentation”. Regarding complying presentation, the concept of “should not
be inconsistent” is replaced with “should not conflict”. It emphasizes that
data need not be same, but should not conflict. But
not conflicting does not signify complying.
2. The concept of “honor” is against the concept of
“negotiate”.
3. The concept of “negotiation” is interpreted into
a) advancing funds before the issuing bank honors or b) agreeing to advance
funds before the issuing bank honors. However, such concept is still
problematic. The issuing bank may encounter a bank that has agreed to
advance funds but not really paid in advance to claim it is a qualified
negotiating bank subject to UCP600.
4. Presentation may be interpreted as documents
presented or the act of presenting documents.
5. Different from UCP500, the issuing bank/confirming
bank cannot ignore and disregard the term "prompt", "immediately" or "as
soon as possible" in any event. When they are required to be used in a
document, they should be stilled complied with accordingly.
6. When there is a nominated bank in the credit, the
issuing bank/ confirming bank provides also a promise to the nominated bank
besides that to the beneficiary. This concept is specifically mentioned in
UCP600.
7. “a nomination by an issuing bank for a
nominated bank to accept a draft or incur a deferred payment undertaking
includes an authorization for the nominated bank to prepay or purchase a
draft accepted or a deferred payment undertaking incurred by the nominated
bank.” This added wording may remove the impediment brought by the cases
to discounting before maturity. Now it seems that this controversial issue
may be settled well under UCP600. The job is done well, in my view, and
definitely welcomed by bankers and traders and judges, because it is
reflecting sound commercial sense and the current prevailing banking and
trade practice in the practical commercial world.
8. Instead of “reasonable time”, five banking days
are required for the banks to examine and refuse the documents. It will
bring more certainty to the banks, because as long as the banks act within
five banking days they may be deemed as acting according to UCP600.
9. The issuing bank may state in its refusal notice
that “it may release documents to the applicant so long as it receives the
applicant’s waiver of discrepancies and no contrary instructions from the
presenter before” or similar ones.
10. Charter party bills of lading may be signed by
charterer or its agent other than master, ship owner and their agents.
11. When an agent for the master signs bills of
lading, the master’s name need not be indicated.
12. AWB must be indicate the date of issuance. When
there is a special notation regarding the dispatch date/flight date, such a
date in the notation will be deemed as shipment date regardless of whether
the credit requires the AWB presented show such dispatch date/flight date.
13. A transport document may bear a reference, by
stamp or otherwise, to charges additional to the freight, even though such
charges are not in connection with loading, unloading or similar operations.
15. Insurance documents may be signed by the proxy
of the insurer or underwriter.
16. Any exclusion clause appeared in insurance
documents may be acceptable.
For advising bank:
UCP 600 puts one more obligation on the advising
bank of accurately advising the credit to the beneficiary, which is not
stipulated under UCP500.
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