UCP500. (International Affairs Section).(Brief Article)

This eighth commentary on UCP500 examines Article 14.

Article 14

It has been reported by the Technical Advisor to the ICC's Banking Commission that approximately a quarter of all queries he receives on UCP500 concern this particular Article. As a consequence, the ICC has recently issued an educational document which is intended to be of assistance mainly to the banks themselves, but should not be overlooked by importers and exporters.

It is a fundamental principle that compliant documents must be honored, banks having examined them with the "reasonable care" etc. referred to in Article 13 (see my last commentary). The problems arise with discrepant documents. Banks must determine "on the basis of the documents alone"--in other words, they must not be influenced by outside pressures-whether or not the documents appear on their face to be compliant. However, while apparently compliant documents must be honored, banks are not obliged to refuse documents which are apparently non-compliant. Article 14b says only that banks may refuse-not must refuse-to take up documents.

The easy and obvious option for a bank is simply to refuse all non-compliant documents and provide a notice of refusal to the presenter in accordance with the requirements of Article 14d. However, this has proved a minefield for banks-some of them, at least. The problem areas that have caused them to come unstuck are particularly:

1) the time taken to provide notice of refusal-what exactly is "without delay"?

2) failure to specify all the discrepancies justifying refusal;