UNIFORM CUSTOMS AND PRACTICES

FOR DOCUMENTARY CREDITS

Uniform Customs and Practices for Documentary
Credits are rules and procedure published by
International Chamber of Commerce
Provisions

Care should be taken in specifying expiration dates

The applicant must specify if the letter of credit is transferable.
The applicant must specify that the letter be confirmed
The currency of the letter of credit should be designated using
ISO currency code.
The applicant should designate the nominating bank

UNIFORM CUSTOMS AND PRACTICES FOR

DOCUMENTARY CREDITS
Uniform Customs and Practices for Documentary
Credits-provisions continued.
Applicant must specify clearly whether the letter of
credit will be available for partial shipment.
The letter of credit should provide transport details
Under rule of strict compliance, banks are authorized
to reject documents if there are any discrepancies.
Facial Compliance Rule-bank only required to review
documents.
Banks are not required to investigate trade customs or usage

UNIFORM CUSTOMS AND PRACTICES

FOR DOCUMENTARY CREDITS
Uniform Customs and Practices for Documentary
Credits-provisions continued
Description of the Goods should be clear and brief as
possible.
In the listing of documents, should list the contents of each
document.
Transportation Documents must be clear.
Insurance Documents must be clear.
Time periods for presentation of documents must be
specified.
Title of Letter of Credit should specify irrevocable.

STANBY LETTER OF CREDIT

Standby Letter of Credit is a letter of credit
that represents an obligation to the
beneficiary on the part of the issuer
International Standby Practices
Standby Letters of Credit secures contractual
obligations in construction contracts, service
contracts, warranties, counter-trade trade
obligations, secures international loans and
supplies.

ALTERNATIVE METHODS OF
GUARANTEEING PERFORMANCE

Alternative Methods of Guaranteeing

Performance
Types
Performance Bond-a guarantee from an insurance
company to pay insured in case of default.
Bid Bond-insure against the risk that a bidder may
not honor its bid.
Credit Surety-guarantees the repayment to a bank or
lender who finances an export transaction or
development project. Exim Bank of World Bank

ALTERNATIVE METHODS OF
GUARANTEEING PERFORMANCE

Types-Continued
Retention Fund-in large or government
projects, a percentage is deducted from each
payment due to the supplier or contractor and is
retained in a fund pending completion of
project.
Demand Guarantee secures performance of a
non-monetary obligation.

SOURCES OF TRADE
FINANCE
Commercial Banks
Export Financing
Borrowing against trade documents
Factoring-exporter transfers title to its account receivable to a
factoring company at a discount.
Forfaithing-selling at a discount, of longer term receivables or
promissory notes to a foreign buyer.
Transferable Credit-suppliers accept part of the letter of credit
that seller receives from buyer in export transaction.
Back to Back Letter of Credit-buyer makes arrangements with
third bank to make loan.