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A. General Provisions and Definitions
Article 1 Application of UCP
The Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publications No. 500, shall apply to all Documentary Credits (including to the extent to which they may be applicable, Standby Letter(s) of Credit) where they are incorporated into the text of the Credit. They are binding on all parties thereto, unless otherwise expressly stipulated in the Credit.
Article 2 Meaning of Credit
For the purpose of these Articles, the expressions ’Documentary Credit(s)’ and ’Standby Letter(s) of Credit’ (hereinafter referred to as ’Credit(s)’), mean any arrangement, however named or described whereby a bank (the ’Issuing Bank’) acting at the request and on the instructions of a customer (the ’Applicant’) or on its own behalf.
i. is to make a payment to or to the order of a third party (the ’Beneficiary’), or is to accept and pay bills of exchange (Draft(s)) drawn by the Beneficiary,
or
ii. authorises another bank to effect such payment, or to accept and pay such bills of exchange (Draft(s)),
or
iii. authorises another bank to negotiate,
against stipulated document(s), provided that the terms and conditions of the Credit are complied with.
For the purpose of these Articles, branches of a bank in different countries are considered another bank.
Article 3 Credits v. Contracts
a Credits by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the Credit. Concequently the undertaking of a bank to pay, accept and pay Draft(s) or negotiate and/or to fulfil any other obligation under the Credit, is not subject to claims or defences by the Applicant resulting from his relationships with the Issuing Bank or the Beneficiary.
b A Beneficiary can in no case avail himself of the contractural relationships exisiting between the banks or between the Applicant and the Issuing Bank.
Article 4 Documents v. Goods/Services/Performances
In Credit operations all parties concerned deal with documents, and not with goods, services and/or other performances to which the documents may relate.
Article 5 Instructions to issue/amend Credits
a Instructions for the issuance of a Credit, the Credit itself, instructions for an amendment thereto, and the amendment itself, must be complete and precise.
In order to guard against confusion and misunderstanding, banks should discourage any attempt:
i. to include excessive detail in the Credit or in any amendment thereto,
ii. to give instructions to issue, advise or confirm a Credit by reference to a Credit previously issued (similar Credit) where such previous Credit has been subject to accepted amendment(s), and/or unaccepted amendment(s).
b All instructions for the issuance of a Credit and the Credit itself and, where applicable, all instructions for an amendment thereto and the amendment itself, must state precisely the document(s) against which payment, acceptance or negotiation is to be made.
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