Almost all of the letters of credit issued in swift format having a clause under field “40E: Applicable Rules” telling us that the letter of credit subject to “UCP Latest Version“.
In this post, I explain the meaning of UCP and its latest version.
What Does UCP Mean?
UCP is the short form of Uniform Customs and Practice for Documentary Credits.
UCP is the set of international rules that govern the letter of credit transactions throughout the world.
It would be necessary to state that some professionals mistakenly use UCPDC abbreviation instead of UCP. Correct usage should be UCP for the Uniform Customs and Practice for Documentary Credits not UCPDC.
What is the Latest Version of UCP?
First international letter of credit rules published nearly 80 years ago in year 1933. Since then letter of credit rules have been revised regularly by ICC ( International Chamber of Commerce).
Let us have a look at the UCP history below,
- 1933 – Uniform Customs and Practice for Commercial Documentary Credits
- 1951 Revision – Uniform Customs and Practice for Commercial Documentary Credits
- 1962 Revision – Uniform Customs and Practice for Documentary Credits
- 1974 Revision – Uniform Customs and Practice for Documentary Credits
- 1983 Revision – Uniform Customs and Practice for Documentary Credits (UCP 400)
- 1993 Revision – Uniform Customs and Practice for Documentary Credits (UCP 500)
- 2007 Revision – Uniform Customs and Practice for Documentary Credits (UCP 600)
As indicated above 2007 Revision of the letter of credit rules are the latest version of the Uniform Customs and Practice for Documentary Credits.
Why Banks Give Reference to the Latest Version of UCP in Letters of Credit?
Banks, who do not want to create any ambiguity when issuing letters of credit, should always mention that letters of credit that they have issued is subject to “UCP Latest Version“.
If issuing banks would not act as explained above, by not giving express reference to the exact version of letter of credit rules when issuing letters of credit, then one of the letter of credit parties may indicate that they would like to use other version of Uniform Customs and Practice for Documentary Credits when fulfilling their obligations.
