Ucp600 And Applied In International Trade

As technology, trade, transport, finance and insurance develop fast, UCP500 can not follow the need of times, and its defects in completion and pertinence show up as well. Besides, obscurity and prolixity of its expression and unorganized combination of its articles are also problems which harass the trade practice circle. Under these circumstances modification to UCP500 becomes a necessity. The outcome is that UCP600 comes into being and takes effect on July 1st, 2007. As the most authoritative and influential international commercial custom in the region of letter of credit, the new revision will have a widespread and profound influence on the business of letter of credit all over the world. As China is a big country in import and export trade and often uses letter of credit which is a traditional way of payment and settlement, this article, making reference to some typical cases, adopts the method of positivism analysis to make a systemized study of the new content in UCP600 and then discusses the influence of UCP600 on parties in letter of credit relationship, hoping to contribute to keeping away from trade risks and making use of the provisions in UCP600 properly to protect our nation's interests in international trade.The first part discusses the background of the birth of UCP600. Some content in UCP500 can not keep up with the development of international transport, insurance and finance. Owing to the flaws of some provisions in UCP500, as well as misunderstanding and mistakenly application of international trade practice circle, the issues related to letter of credit emerge endlessly, which has endangered the position of letter of credit in international settlement. A high proportion of documents presented are rejected because of discrepancy, which makes a rational trader doubt the basic function of letter of credit as a payment instrument. A series of documents promulgated by International Chamber of Commerce after UCP500 help to clarify the misunderstanding on some articles in UCP500, whereas the unorganized documents also bring inconvenience to users, so it is necessary to sort and systemize them. Just under these circumstances UCP600 comes into being as the times require.The second part is about the main content of modification and the application of UCP600. UCP600 makes a great adjustment in structure, and expression is more concise and accurate, however the most distinct and important changes are in the aspect of essential content. First, the examination standard of strict compliance has been relaxed. As long as the data content of the documents presented do not conflict with that of the letter of credit, they will be accepted by the banks. Furthermore, the bank is given maximum period of "five banking days" to decide whether or not to accept the documents while in UCP500 the requirement for document examination time is "reasonable time", not exceeding seven banking days. Second, the word "negotiation" is further defined which means the purchase by the nominated bank of drafts and/or documents under a complying presentation, by either advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. Third, by nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank. Finally, after refusing to accept the documents banks have two more ways to deal with the discrepant documents, namely, "holding the documents until it receives a waiver from the applicant" and "acting in accordance with instructions previously received from the presenter".The third part generalizes the influence of UCP600 on international trade. There are still some issues even holes in UCP600, but after all it insists more firmly on the doctrine of independence and irrevocability of letter of credit, clarifies the rights and obligations of the relative parties as well as the relationships between them, puts more burden on the issuing bank, relaxes the requirements for the documents and ensures the rights and interests of the beneficiary, thus will bring an active influence on international trade practice.