Article 12

URC 522 Article 12: “Disclaimer on Documents Received” – Explanation

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“ARTICLE 12 DISCLAIMER ON DOCUMENTS RECEIVED”

a Banks must determine that the documents received appear to be as listed in the collection instruction and must advise by telecommunication or, if that is not possible, by other expeditious means, without delay, the party from whom the collection instruction was received of any documents missing, or found to be other than listed. Banks have no further obligation in this respect.

Explanation: This clause mandates that banks must check whether the documents they receive match the list provided in the collection instruction. If there are any discrepancies, such as missing documents or documents that do not match the list, the bank must inform the party who issued the collection instruction immediately. This communication should be made as quickly as possible, using telecommunication methods if available, or otherwise through other prompt means. Once this notification is done, the bank has no further responsibility concerning these discrepancies.

Example: Suppose a bank receives a collection instruction stating that the documents should include an invoice, a bill of lading, and a certificate of origin. If the bank only receives an invoice and a bill of lading, it must promptly notify the party who issued the instruction about the missing certificate of origin. After this notification, the bank is not obligated to investigate or resolve the discrepancy further.

b If the documents do not appear to be listed, the remitting bank shall be precluded from disputing the type and number of documents received by the collecting bank.

Explanation: This clause means that if the documents provided to the collecting bank do not match the listed documents, the remitting bank (the bank that sent the documents) cannot later dispute or argue about the types or numbers of documents received by the collecting bank. Essentially, the remitting bank has to accept that the documents were received as listed and cannot challenge discrepancies after the fact.

Example: If the remitting bank sent a shipment of documents that were supposed to include an insurance certificate and a packing list, but the collecting bank received only a packing list, the remitting bank cannot later claim that the insurance certificate was included or that the collecting bank made an error in the number of documents received.

c Subject to sub-Article 5(c) and sub-Articles 12(a) and 12(b) above, banks will present documents as received without further examination.

Explanation: According to this clause, banks are required to present the documents they receive without additional scrutiny, following the stipulations outlined in sub-Article 5(c) and the provisions in sub-Articles 12(a) and 12(b). This means that after the initial check and notification of any discrepancies, banks are not responsible for further examination of the documents.

Example: If a bank receives documents and has notified the issuing party of any missing items as required by Article 12(a), and there are no disputes as per Article 12(b), the bank will present the documents exactly as received to the relevant parties, without performing any additional checks or modifications.

UCP600 Article 12 Explanation – CDCS Guide: Nomination

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Clause a

Text:
“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.”

Explanation:
This clause means that if a bank is nominated to honour or negotiate a letter of credit (L/C) but is not a confirming bank, it is not automatically obliged to honour or negotiate unless it has agreed to do so and has informed the beneficiary. A confirming bank is one that adds its confirmation to the credit, thereby confirming bank is bound to honor or negotiate the documents if the terms of the L/C are met.

Example:
A beneficiary receives an L/C from Bank A, which nominates Bank B to honour or negotiate (this happens when LC is restricted to bank B). However, Bank B has not added its confirmation to the L/C. In this case, Bank B is not obligated to pay the beneficiary unless it has expressly agreed to do so and communicated this to the beneficiary.

Clause b

Text:
“By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that nominated bank.”

Explanation:
When an issuing bank nominates another bank to accept a draft or take on a deferred payment undertaking, it is giving that nominated bank the authority to prepay or purchase the accepted draft or the deferred payment undertaking. This means the nominated bank can advance funds based on the draft or deferred payment undertaking.

Example:
Bank A issues an L/C and nominates Bank B to accept drafts (this happens when LC is restricted to bank B). In time of advising the LC Bank B communicates the beneficiary that they will prepay against presentation of complied documents. The beneficiary then presents a draft along with other documents as per LC, Bank B can then decide to prepay the draft amount to the beneficiary or purchase the draft, providing immediate funds to the beneficiary.

Clause c

Text:
“Receipt or examination and forwarding of documents by a nominated bank that is not a confirming bank does not make that nominated bank liable to honour or negotiate, nor does it constitute honour or negotiation.”

Explanation:
If a nominated bank that is not a confirming bank receives, examines, and forwards documents under the L/C, it is not liable to honour or negotiate the credit. Simply handling the documents does not mean the nominated bank has undertaken the responsibility to pay the beneficiary.

Example:
Bank A issues an L/C and nominates Bank B. The beneficiary submits documents to Bank B, which then examines and forwards them to Bank A. Since Bank B is not a confirming bank, it is not obligated to pay the beneficiary; it is merely acting as an intermediary in the document handling process.