Documentary Letters of Credit (UCPDC 600)
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What is the primary function of a Letter of Credit in international trade?
Converts credit risk of unknown overseas buyer into credit risk of well-known bank.
Which organization publishes UCP 600 and when did it come into force?
International Chamber of Commerce (ICC), Paris; in force since 1 July 2007.
Is UCP 600 mandatory or voluntary for banks worldwide?
Voluntary private code; adopted by banks worldwide; de-facto standard in India via RBI/FEDAI.
What does Article 30(a) of UCP 600 permit regarding LC amount?
When 'about' or 'approximately' used, tolerance of ±10% on amount, quantity, or unit price allowed.
Invoice amount ₹52,35,600 presented against LC of approximately ₹50,00,000. Is it acceptable?
Yes; ₹52,35,600 falls within ±10% tolerance band (₹45,00,000–₹55,00,000) under Article 30(a).
What tolerance does Article 30(b) permit for quantity variance?
±5% tolerance when LC doesn't specify packing units/individual items and drawing doesn't exceed LC amount.
3% quantity variance presented; LC has no packing units specified. Is issuing bank's refusal valid?
No; 3% falls within ±5% tolerance under Article 30(b); issuing bank refusal is invalid.
What does UCP 600 Article 36 state regarding force majeure events?
Bank assumes no liability for interruptions from acts of God, riots, wars, strikes, or causes beyond control.
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