ABSTRACT
The system of documentary credit is based on the fact that in international commercial contracts, a seller of goods will not only have to ensure that the goods themselves are delivered, but will also be required to transfer a range of documents to the buyer. If the documents presented comply with the requirements stated in the documentary credit, the issuing bank must honour the credit in line with its undertakings as per Article 7 UCP600. A confirming bank undertakes to honour if a complying presentation is made on the same basis as the issuing bank. If a bank determines that the presentation made by the beneficiary does not constitute a complying presentation, then the bank may refuse to honour or negotiate. The seller/beneficiary must present all the documents required in accordance with the terms of the documentary credit itself, as well as with the provisions of the UCP600 dealing with particular documents, and international standard banking practice.
