Terms and conditions governing letters of credit are
laid down in what is known as the Uniform Custom and Practice for Documentary
Credits, issued by the International Chamber of Commerce. Matters of particular
interest to the commodity trade include the basic responsibilities of banks when
examining documents tendered for payment under letters of credit governed by the
UCP 600, and the requirements pertaining to different types of documents that
may be tendered under letters of credit. However, UCP 600 only applies when the
text of the credit expressly indicates that it is subject to these rules.
The most recent version, the UCP 600, is effective
from 1st July 2007 and can be purchased from www.iccbooks.com. An explanatory booklet, published
by Reed Smith Richards Butler LLP in London and of considerable interest to
exporters, importers and traders using documentary credits, is also available at
The text that follows is largely based on the
ReedSmith booklet and is quoted with their kind permission.