Uniform Customs and Practice (UCP 600)
UCP 600 is a set of internationally accepted rules that govern documentary credits, commonly known as Letters of Credit (LCs). Issued by the International Chamber of Commerce, these rules standardize how banks handle LC transactions in global trade. They define responsibilities, timelines, and document requirements. This creates consistency across countries and banking systems.
UCP 600 focuses on documents rather than the physical goods being traded. Banks examine documents strictly to ensure they comply with LC terms before releasing payment. This reduces uncertainty and risk for both buyers and sellers. Clear rules help prevent disputes caused by differing local banking practices.
The rules cover areas such as document examination standards, discrepancies, presentation periods, and bank liabilities. Because UCP 600 is widely adopted, traders and banks can operate with shared expectations. This speeds up transactions and improves trust. It also supports smoother cross-border payments.
Overall, UCP 600 provides a reliable framework for secure international trade finance. It protects all parties by setting clear, uniform rules. It reduces misunderstandings in LC transactions. And it helps global trade function efficiently and predictably.
Frequently Asked Questions about Uniform Customs and Practice (UCP 600)
Clear answers to the most common questions people have when learning about Uniform Customs and Practice (UCP 600).
It standardizes how LCs are handled worldwide, ensuring banks follow the same rules when checking documents and releasing payments.
No. It applies only when the LC explicitly states that it is subject to UCP 600.
No. It deals only with document compliance, not with the actual goods, services, or performance of the contract.