UCP 1983. Uniform Customs and Practice for Documentary Credits (1983 Revision) of the International Chamber of Commerce; ICC Publication Number 400.
In the international sale of goods which will be carried by sea the buyer may not be known to the seller and their contract of sale may depend on how the seller obtains payment for the goods he exports and how the buyer obtains control over the goods before he pays for them. This leads to an obvious problem. Then in comes the banking system as the “middle-men” to help to solve the problems. The solution started in 1933, and was revised in 1951, 1962 and 1974. The new solution is likely to last into the next century. As the Chairman of the ICC Commission on Banking Technique and Practice said in his foreword to the UCP 1983 edition:
“How can the UCP have become and remain so indispensable over such a long period - a period which moreover seems certain to extend well into the 21st century? I see two reasons. First, the realities of international trade continue to require documentary credits and therefore an internationally accepted set of standards governing their use Secondly, the UCP are fortunately a living text, which has been regularly updated by the ICC Banking Commission since its initial introduction…”
The contract of sale between the seller and buyer may establish that they use the “documentary credit system” (or, as these credits are commonly called, a “letter of credit”). In this system banks will be involved and require to follow a uniform code of procedure. This is contained in the UCP.
UCP is concerned with bills of lading and other transport documents mainly because the essence of the system is that payment is made by banks for documents. Indeed, Art. 4 of UCP states that “in credit operations all parties concerned deal in documents and not in goods, services and/or other performances to which the documents may relate”. Accordingly the documents, which include bills of lading, must comply with the UCP standards for them to be transacted successfully.
BLOG COMMENTS POWERED BY DISQUS