UCP 600
ICC rules governing documentary credits (LCs) in international trade.
Detailed Description
UCP 600
What is UCP 600?
UCP 600 is a set of rules established by the International Chamber of Commerce that governs the use of letters of credit in international trade.
What is the primary purpose of UCP 600?
The primary purpose of UCP 600 is to facilitate international trade by providing a uniform set of rules to mitigate risks in cross-border transactions.
What does the principle of 'Independence of the Credit' mean?
It means that the letter of credit is a separate contract from the underlying transaction, and banks must honor it based on documents presented.
How does UCP 600 differ from UCP 500?
UCP 600 introduces clearer definitions, emphasizes documentary compliance, acknowledges electronic documents, and clarifies the liabilities of banks.
Why is UCP 600 important in international trade?
UCP 600 provides a reliable payment mechanism, reducing risks associated with non-payment and disputes, thus facilitating smoother cross-border transactions.