Disregard, Obligation and Without Delay in UCP 600

In this post we are going to discuss about the words Disregard, Obligation and Without Delay in UCP 600.

Before we start today’s topic let’s recall that in an earlier post we had discussed the usage of 3 very important words that appear in the text of UCP 600, the rules that govern issuances of letters of credit.  These words were:  must, may and should. Click here to read the earlier post.

Today, we are going to have a look at a few other  words or phrases from the UCP 600. These words or phrases appear in multiple instances in the UCP 600 and across various articles. An important point to note here is that irrespective of the article where they appear, these words signify a specific type of action to be taken by the parties concerned.

Let’s study the words Disregard, Obligation and Without Delay in UCP 600 with examples.

The first word is “Disregard”

The word “disregard” means to ignore or to not pay any attention.

Let’s check a few instances where this word appears in the UCP.

1. A provision in an amendment to the effect that the amendment shall enter into force unless rejected by the beneficiary within a certain time shall be disregarded. (Article 10)

Any amendment to a credit must be accepted by the beneficiary. A beneficiary must convey their acceptance or rejection of an amendment. However in real life situations, beneficiaries rarely do this. In order to accelerate the process, some issuing banks may include clauses like, “this amendment shall enter into force if it is not rejected by the beneficiary within 10 days from the date of this amendment”.  Any such clauses in the amendment will be disregarded or ignored. The UCP allows the beneficiary to signify acceptance or rejection up to the time of presentation of documents.

2. A document presented but not required by the credit will be disregarded and may be returned to the presenter. (Article 14)

A document received in a presentation which is not in the list of documents required as per credit will be disregarded or ignored. This document will not be checked and the bank checking the docs may return it back to the presenter.

The second word is “Obligation”

The word “obligation” means responsibility. Wherever this word appears, it signifies whether the concerned party has a responsibility or doesn’t have any responsibility in that particular situation.

Let’s check a few instances where this word appears in the UCP.

1. Unless a nominated bank is the confirming bank, an authorization to honour or negotiate does not impose any obligation on that nominated bank to honour or negotiate, except when expressly agreed to by that nominated bank and so communicated to the beneficiary.  (Article 12)

Even though an issuing bank names a specific bank in the credit as the nominated bank, that bank has no obligation to honour or negotiate unless that bank is the confirming bank or that bank agrees to act on its nomination and communicates the same to the beneficiary

2. A bank has no obligation to accept a presentation outside of its banking hours. (Article 33)

If a presentation under a credit is received by bank after its published banking hours, it has no obligation to accept the presentation.

The third one is a phrase which is “Without delay”

Whenever this phrase appears in the UCP, it signifies an action to be taken by the concerned bank without delay i.e. immediately.

Let’s take a few examples.

1. If a bank is authorized or requested by the issuing bank to confirm a credit but is not prepared to do so, it must inform the issuing bank without delay and may advise the credit without confirmation. (Article 8)

A bank authorized or requested by the issuing bank to add its confirmation is under no obligation to do so. If it decides not to add its confirmation, it is not required to offer any reason. The only responsibility of that bank is to inform the issuing bank of its inability to confirm the credit. This must be done without delay i.e. immediately.

2. If a bank is requested to advise a credit or amendment but elects not to do so, it must so inform, without delay, the bank from which the credit, amendment or advice has been received. (Article 9)

An advising bank is under no obligation to advise a credit or an amendment. If an advising bank decides not to advise a credit or an amendment,  it is not required to offer any reason. The only responsibility of that bank is to inform the issuing bank of its inability to advise the credit or an amendment. This must be done without delay i.e. immediately.

Similarly a second advising bank is also under no obligation to advise a credit or an amendment. If the second advising bank decides not to advise a credit or an amendment, it must inform the advising bank without delay.

That’s the end of this topic. Next time you read the UCP, I suggest you to use a pdf version and go through all the instances where these words appear. It will help you understand the UCP better.

I hope you liked this post about the words Disregard, Obligation and Without Delay in UCP 600.

Do share your views in the comments below.

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