UCP500. (International Affairs Section).(seventh commentary examines Articles 11 and 13)(Brief Article)

This seventh commentary on UCP500 examines Articles 11 and 13.

Article 11

This is one of the less problematical Articles. Ideally, authenticated electronic teletransmissions, if complete in all their details, should not be followed up with a mail confirmation--this causes everybody additional and unnecessary work, as well as potentially causing confusion if the mail confirmation differs in any way from the teletransmission. However, if the issuing bank for whatever reason decides to send a mail confirmation, the advising bank is under no obligation to check it, and should there be any difference between the teletransmission and the mail confirmation, it is the teletransmission that prevails. When teletransmissions state that further details are to follow by mail, then the mail confirmation will of course be the operative instrument.

It should be noted that in those instances where a preliminary advice is sent, the issuing bank is obliged to issue a full letter of credit (or amendment) without delay in terms not inconsistent with the preliminary advice, unless the issuing bank states otherwise. One questions what value such a preliminary advice would have, and fortunately, these occurrences are rare. The main object of this Article is to protect the beneficiary from uncertainty by spelling out to issuing banks their obligations in this area.

Article 13

Sub-article 13a uses a number of subjective terms that will always give rise to at least an element of disagreement as to interpretation and application, but such disagreement should only be of degree rather than of basic principle. For example, the concept of reasonable care implies that document examiners should be professionally competent following appropriate training. It is almost certain that examiners will be experienced in handling international trade documents from performing other duties in the bank prior to examining documents under LCs, but banks would not be expected to employ law graduates or experts in fraud and forgery.

The expression "appear on their face" does not refer to the front or the back of a document, rather it requires banks to look for obvious signs of conformity or non-conformity of documents. It does not oblige them to carry out a detailed fine-toothcomb check, perhaps needing the use of a magnifying glass to try to read and then understand the legalese wrapped up in the small print of documents such as bills of lading and insurance policies/certificates.