A Guide to Pre-Advised Credits



Nowadays, very few credits are pre-advised. However, it is worth re-capping how such credits should be addressed. 


UCP 600 article 11, Teletransmitted and Pre-Advised Credits and Amendments,caters for the limited number of credits that comprise of a pre-advice with a subsequent mail or telecommunication confirmation.



UCP 82, article 9, incorporated a form of pre-advising of a credit by stating "When a correspondent is instructed by cable or telegram to notify such Letter of Credit, the issuing bank must send the original of the Letter of Credit to the said correspondent, if it is intended to put the document itself into circulation."


UCP 222, in article 4, referred to the situation where the mail advice was to be the operative credit and the need for the issuing bank to send it to the notifying (advising) bank.


UCP 290, article 4, contained similar language to UCP 222, but referred to the mail confirmation being the operative credit. 


UCP 400 required that the issuing bank, following issuance of a pre-advice, must forward the operative credit instrument or the operative amendment to the advising bank without delay.


UCP 600 sub-article 11 (b) imposes an obligation on the issuing bank by stating that pre-advices are only to be sent in circumstances when there is no doubt that the issuing bank will issue the operative credit or amendment. As a result of sending a pre-advice, an issuing bank is irrevocably committed to issue the relevant operative credit or amendment. This is to be handled without delay, and must be in terms not inconsistent with the pre-advice.



In the past, the use of pre-advices as a means of providing a preliminary advice of the issuance of a credit was quite prevalent. At that time, most credits were issued in paper form and the pre-advice served as an effective message to the beneficiary that a credit had been, or was about to be, issued in its favour.


In current times, the extensive use of the MT700 message as a means of advising the beneficiary of the terms and conditions of a credit has largely diminished the need for any pre-advice to be issued. 


As mentioned above, when a pre-advice is issued, UCP 600 sub-article 11 (b) commits the issuing bank to issuing the operative credit without delay.


The SWIFT message type for a pre-advice is the MT705.

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