Letter of Credit Forum

Uncle Sam wants you (r money) . Anyone remember the times when health care reform for 30 billion was too expensive ? Now that the TARP flood gates of 700 billion dollars are being opened (car manufacturers are on the list, anybody else out there ?) some US policy makers devise plans to fill the treasury coffers.  

A Credit transaction will be substantially determined 

Article 4 UCP (entitled "Credits v. Contracts") confirms (as did Article 3 UCP 500), that a "A credit by its nature is a separate transaction from the sale or other contract on which it may be based." In this regard there is no change to the UCP 500: a letter of credit is not a contract to the benefit of a third party; under no circumstances can the beneficiary avail itself of the relation between applicant and issuing Bank.

Letters of Credit blamed for collapse of international trade Several bloggers (see here) claim that the collapse of the Baltic Dry Index (an index of the cost of chartering bulk cargo vessels for goods like ore, cotton, grain, etc.) is the result of the collapse of trade credit based on letters of credit.

Similar to the definitions of Article 2 UCP 600, Article 3 UCP 600 concentrates all the rules for interpretation in a single article. Whether this leads to the simplification, as the ICC intended, remains to be seen. As with the definitions,  the practicioner might not always easily see to which passage to apply these interpretations.