Uniform Customs and Practice for Documentary Credits (UCP)
Most letters of credit are subject to UCP 500, which are the universally recognised set of rules governing the use of the documentary credits in international trade. UCP were originally formulated in 1933 by the International Chamber of Commerce (ICC) and last updated in 1993 (ICC publication 500). All definitions and general documentary requirements referred to in this briefing are in accordance with UCP500 unless otherwise stated (it should be remembered that in some instances this may differ from national law). SITPRO would only recommend using letters of credit which are subject to UCP500.
It is important to negotiate, at contractual stage if possible, which party will bear bank charges. It is worth remembering that on a small transaction these may be totally out of proportion and if these costs are not included in the pricing any profit may be completely eroded.
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