The words Must, May and Should in UCP 600

by

In this post we are going to discuss about the words Must, May and Should in UCP 600. This is an interesting aspect of UCP 600, the rules that govern issuances of letters of credit, all over the world. We’ll not discuss any specific topic or any article. Rather, this topic is about the UCP as a whole.

Today we’ll look at the usage of 3 very important words in the whole text of UCP 600.

These words are:  “must”, “may” and “should”.

Each of these 3 words have its own significance.

Table of Contents

“Must”

The word “must” means that whatever follows after this word in the UCP is a rule.

Let’s understand this with an example.

Article 6 (b) states that “A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation.”    

So this is something which has to be followed. This is a rule. A credit must state how it is available, whether it is available by sight payment, deferred payment, acceptance or negotiation.

Let’s take another example.

Similarly, Article 15 (a) states that

“When an issuing bank determines that a presentation is complying, it must honour.”

This is also a rule. There cannot be any exception to this.

“May”

Now let’s come to the 2nd word which is “may”. The word “may” signifies an option.

We’ll take an example

Article 14 (g) states that “A document presented but not required by the credit will be disregarded and may be returned to the presenter.”

So a document presented but not required by the credit i.e. an extraneous document is presented under a credit. Here, the bank checking the documents have an option to return the document to the presenter.  However it is important to note that the document may not be returned.  There is no obligation on the bank to return the document.  That’s why it is an option available to the bank.

Now let’s take an example which contains both the words “must” and “may”

Article 8(d) states that “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.”

In this sentence we find both the words for a rule and an option.

The first part of the sentence is a rule. If a bank authorized or requested by the issuing bank to confirm a credit is not ready to add its confirmation to the credit for whatever reasons, the concerned bank must inform the issuing bank without delay. They have to do it as per UCP.

Now, the 2nd part is an option. They may choose to advise the credit to the beneficiary without adding their confirmation.  However there is no obligation on their part to advise the credit without confirmation. They may not do the same if they do not want to.

“Should”

Finally let’s come to the 3rd word which is “should”. The word “should” signifies a recommendation.

Let’s discuss this with an example.

4 b. An issuing bank should discourage any attempt by the applicant to include, as an integral part of the credit, copies of the underlying contract, proforma invoice and the like.

So this is something which is a recommendation. UCP recommends that issuing bank should discourage any attempt by the applicant to include copies of the underlying contract, proforma invoice etc. as an integral part of the credit. However the issuing is not bound to follow the recommendation.

Let’s take another example.

Article 10 (d) states that a bank that advises an amendment should inform the bank from which it received the amendment of any notification of acceptance or rejection.

This means that an advising bank or a second bank advising bank, depending on the situation, should inform the bank from which it received the amendment of any notification by the beneficiary regarding acceptance or rejection of the said amendment.

This is also a recommendation. The concerned bank need not follow this  recommendation.

Before I end, I’ll summarize what we have discussed,

  • The word Must signifies a rule
  • The word May signifies an option, and
  • The word Should signifies a recommendation

That’s the end of this topic. I hope you all liked this aspect of the words Must, May and Should in UCP 600. Kindly share your feedback in the comments.

Thank you.

Suggested Readings

4 thoughts on “The words Must, May and Should in UCP 600”

Leave a Comment