Reasonable care: does it still exist?


UCP 82, article 10, contained a very simple rule regarding the examination of documents - 'Banks must examine all documents and papers with care so as to ascertain that on their face they appear to be in order.' This continued in article 9 of UCP 151.

UCP 222, article 7, was the first to introduce the concept that documents were to be examined with ‘reasonable care' and ‘in accordance with the terms and conditions of the credit'.

This wording remained in place for UCP 290, article 7, but with added reference to the concept of "inconsistency" - 'Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in compliance with the terms and conditions of the credit.' This was considered to reflect existing practice and was repeated in UCP 400, article 15.

UCP 500, article 13, saw the first reference to a sub-heading in UCP described as 'Standard for Examination of Documents'. Certain formatting changes were made but the basic message remained, i.e. ‘reasonable care' and ‘on their face'. The major change was with the introduction of examining documents in order to ascertain ‘compliance' with ‘international standard banking practice'.

With the release of UCP 600, and the much-expanded article 14, 'on their face' remained as a basic principle, but reference to ‘reasonable care' was finally dropped.

This was predicated upon the fact that the new article provided far wider and comprehensive requirements in respect of the determination of a complying presentation and a more precise definition of the document examination process than that implied by ‘reasonable care'.

But does ‘reasonable care' still exist as an underlying principle? As explained by Raymond Jack in ‘Documentary Credits, Second Edition', reasonable care was simply the care that would be exercised in the particular circumstances by a bank competent to handle documentary credit transactions.

Whilst a number of ICC opinions referenced ‘reasonable care', only one, R423, attempted a definition of the phrase: "The reference in UCP 500 sub-Article 13(a) to the exercise of reasonable care relates to the standard by which the determination of whether there are discrepancies is to be measured, namely with the care a reasonable letter of credit professional would use to determine compliance, which is another way of stating that the examination must be in accordance with standard banking practice."

Based upon the above interpretation, it is clear that ‘reasonable care' is still in place, but is now more precisely defined.

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