Contract wording in a documentary credit


UCP 600 article 4 makes it clear that a credit is a separate transaction from the sale or any underlying contract on which it may be based. Banks cannot be bound by the content of any associated contracts even if a reference is made to such a contract in the credit. 


Furthermore, the current wording discourages any attempt by the applicant to include, as an integral part of the credit, copies or extracts of the underlying contract, proforma invoice and the like. 


As stated in the ‘Commentary on UCP 600', it was recognised that there was nothing that could be stated in the rules that would prohibit a credit from being issued with one of more of the abovementioned ‘attachments'


In any event, an advising bank can elect not to advise a credit if they find this unacceptable. 


It should also be noted by applicants (and issuing banks) that incorporation of such an ‘attachment' actually offers only limited protection with regard to the goods and any required standard or quality: such issues are best resolved by ensuring presentation of the necessary documents and a clear statement of the data that is required to appear therein. 



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