Uniform Customs and Practice - Explained
What are Uniform Customs and Practice for Documentary Credits?
Written by J. Mance Gordon
Updated at April 19th, 2024
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What is the Uniform Customs and Practice for Documentary Credits (UCP)?
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of clearly-defined rules developed by the International Chamber of Commerce (ICC) for governing the issuance and applications of letters of credit (LCs) on an international scale.
The International Chamber of Commerce (ICC) published the Uniform Customs and Practice (UCP) in 1933 in an effort to standardize the practice of handling letters of credit in international trade finance. The voluntary incorporation of ICC rules into contracts lends them a certain degree of flexibility. ICC rules brought about an uniformity in practice as a means to tackle trade obstructions created by conflicting national regulations.
What is UCP600?
The Uniform Customs and Practice for Documentary Credits, Publication 600, also known as UCP600 is the latest revision of Uniform Customs and Practice that came into effect on July 1, 2007, replacing the UCP500 after a gap of 14 years.
UCP600 was the result of three years of extensive research and analysis by the Commission on Banking Technique and Practice - a body within the International Chamber of Commerce.
UCP600 goes hand in hand with the International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), ICC Publication 745, which assists in comprehending if a document complies with the terms of Letters of Credit.
UCP600 contains a set of 39 articles that helps interpret credits that are issued and governed by it. Nevertheless, there are certain exceptions to these rules that can be brought about by express modification or exclusion.