The International Standby Practices – ISP98

Rule 1 c. Because
 a standby is independent, the enforceability of an issuer’s
obligations under a standby does not depend on:
General Provisions
i. the issuer’s right or ability to obtain reimbursement from the appli-
Scope, Application, Definitions, and Interpretation of cant;
These Rules ii. the beneficiary’s right to obtain payment from the applicant;
iii. a reference in the standby to any reimbursement agreement or
1.01 Scope and Application underlying transaction; or
a. These Rules are intended to be applied to standby letters of credit iv. the issuer’s knowledge of performance or breach of any reim-
(including performance, financial, and direct pay standby letters of bursement agreement or underlying transaction.
credit). d. Because a standby is documentary, an issuer’s obligations depend
b. 
A standby letter of credit or other similar undertaking, however on the presentation of documents and an examination of required
named or described, whether for domestic or international use, may documents on their face.
be made subject to these Rules by express reference to them. e. Because a standby or amendment is binding when issued, it is
c. An undertaking subject to these Rules may expressly modify or enforceable against an issuer whether or not the applicant authorized
exclude their application. its issuance, the issuer received a fee, or the beneficiary received or
d. An undertaking subject to these Rules is here-inafter referred to as relied on the standby or the amendment.
a “standby”.
1.07 Independence of the Issuer-Beneficiary Relationship
1.02 Relationship to Law and Other Rules An issuer’s obligations toward the beneficiary are not affected by the
a. These Rules supplement the applicable law to the extent not prohib- issuer’s rights and obligations toward the applicant under any appli-
ited by that law. cable agreement, practice, or law.
b. These Rules supersede conflicting provisions in any other rules of
practice to which a standby letter of credit is also made subject. 1.08 Limits to Responsibilities
An issuer is not responsible for:
1.03 Interpretative Principles a. performance or breach of any underlying transaction;
These Rules shall be interpreted as mercantile usage with regard for: b. accuracy, genuineness, or effect of any document presented under
a. integrity of standbys as reliable and efficient undertakings to pay; the standby;
b. practice and terminology of banks and businesses in day-to-day c. action or omission of others even if the other person is chosen by the
transactions; issuer or nominated person; or
c. consistency within the worldwide system of banking operations and d. observance of law or practice other than that chosen in the standby
commerce; and or applicable at the place of issuance.
d. worldwide uniformity in their interpretation and application.
Terminology
1.04 Effect of the Rules
Unless the context otherwise requires, or unless expressly modified 1.09 Defined Terms
or excluded, these Rules apply as terms and conditions incorporated In
 addition to the meanings given in standard banking practice and
into a standby, confirmation, advice, nomination, amendment, trans­ applicable law, the following terms have or include the meanings
­fer, request for issuance, or other agreement of: indicated below:
i. the issuer; a. Definitions
ii. the beneficiary to the extent it uses the standby; “Applicant”
 is a person who applies for issuance of a standby or for
iii. any advisor; whose account it is issued, and includes (i) a person applying in its
iv. any confirmer; own name but for the account of another person or (ii) an issuer
v. any person nominated in the standby who acts or agrees to act; acting for its own account.
and
“Beneficiary” is a named person who is entitled to draw under a
vi. the applicant who authorizes issuance of the standby or otherwise standby. See Rule 1.11(c)(ii).
agrees to the application of these Rules. “Business Day” means a day on which the place of business at
which the relevant act is to be performed is regularly open; and
1.05 Exclusion of Matters Related to Due Issuance and Fraudulent “Banking Day” means a day on which the relevant bank is regularly
or Abusive Drawing open at the place at which the relevant act is to be performed.
These Rules do not define or otherwise provide for: “Confirmer”
 is a person who, upon an issuer’s nomination to do so,
a. power or authority to issue a standby; adds to the issuer’s undertaking its own undertaking to honor a
b. formal requirements for execution of a standby (e.g. a signed writ­ standby. See Rule 1.11(c)(i).
­ing); or “Demand” means, depending on the context, either a request to
c. defenses to honor based on fraud, abuse, or similar matters. honor a standby or a document that makes such request.
These matters are left to applicable law. “Document” means a draft, demand, document of title, investment
security, invoice, certificate of default, or any other representation of
General Principles fact, law, right, or opinion, that upon presentation (whether in a paper
or electronic medium), is capable of being examined for compliance
1.06 Nature of Standbys with the terms and conditions of a standby.
a. A standby is an irrevocable, independent, documentary, and binding “Drawing” means, depending on the context, either a demand pre-
undertaking when issued and need not so state. sented or a demand honored.
b. Because a standby is irrevocable, an issuer’s obligations under a “Expiration Date” means the latest day for a complying presenta-
standby cannot be amended or cancelled by the issuer except as tion provided in a standby.
provided in the standby or as consented to by the person against “Person” includes a natural person, partnership, corporation, limited
whom the amendment or cancellation is asserted. liability company, government agency, bank, trustee, and any other
legal or commercial association or entity.

1

“Presentation” means, depending on the context, either the act of
v. c  lean or payable on demand (if it does, it signifies merely that
delivering documents for examination under a standby or the docu- it is payable upon presentation of a written demand or other
ments so delivered. documents specified in the standby).
“Presenter” is a person who makes a presentation as or on behalf b. A standby should not use the term “and/or” (if it does it means
of a beneficiary or nominated person. either or both).
“Signature” includes any symbol executed or adopted by a person c. The following terms have no single accepted meaning:
with a present intent to authenticate a document. i. and shall be disregarded:
b. Cross References “callable”,
“Amendment” – Rule 2.06 “divisible”,
“Advice” – Rule 2.05 “fractionable”,
“Approximately” (“About” or “Circa”) – Rule 3.08(f) “indivisible”, and
“Assignment of Proceeds” – Rule 6.06 “transmissible”,
“Automatic Amendment” – Rule 2.06(a)
ii. and shall be disregarded unless their context gives them meaning:
“Copy” – Rule 4.15(d) “assignable”,
“Cover Instructions” – Rule 5.08 “evergreen”,
“Honor” – Rule 2.01 “reinstate”, and
“Issuer” – Rule 2.01 “revolving”.
“Multiple Presentations” – Rule 3.08(b)
“Nominated Person” – Rule 2.04 1.11 Interpretation of These Rules
“Non-documentary Conditions” – Rule 4.11 a. 
These Rules, are to be interpreted in the context of applicable
“Original” – Rule 4.15(b) & (c) standard practice.
“Partial Drawing” – Rule 3.08(a) b. In these Rules, “standby letter of credit” refers to the type of
“Standby” – Rule 1.01(d) independent undertaking for which these Rules were intended,
“Transfer” – Rule 6.01 whereas “standby” refers to an undertaking subjected to these
“Transferee Beneficiary” – Rule 1.11(c)(ii) Rules.
“Transfer by Operation of Law” – Rule 6.11 c. Unless the context otherwise requires:
c. Electronic Presentations i.  “Issuer” includes a “confirmer” as if the confirmer were a sep-
The following terms in a standby providing for or permitting electronic arate issuer and its confirmation were a separate standby issued
presentation shall have the following meanings unless the context for the account of the issuer;
otherwise requires:
ii. “Beneficiary” includes a person to whom the named beneficiary
“Electronic Record” means: has effectively transferred drawing rights (“transferee benefi-
i. a record (information that is inscribed on a tangible medium or ciary”);
that is stored in an electronic or other medium and is retrievable
iii. “Including” means “including but not limited to”;
in perceivable form); iv. “A or B” means “A or B or both”; “either A or B” means “A or
ii. communicated
 by electronic means to a system for receiving, B, but not both”; and “A and B” means “both A and B”;
storing, retransmitting, or otherwise processing information (data, v. Words in the singular number include the plural, and in the plural
text, images, sounds, codes, computer programs, software, include the singular; and
databases, and the like); and
vi. Words of the neuter gender include any gender.
iii. capable of being authenticated and then examined for compli- d. i. Use of the phrase “unless a standby otherwise states” or the
ance with the terms and conditions of the standby. like in a rule emphasizes that the text of the standby controls over

“Authenticate” means to verify an electronic record by generally the rule;
accepted procedure or methodology in commercial practice:
ii. Absence of such a phrase in other rules does not imply that other
i. the identity of a sender or source, and rules have priority over the text of the standby;
ii. the integrity of or errors in the transmission of information con-
iii. Addition of the term “expressly” or “clearly” to the phrase
tent. “unless a standby otherwise states” or the like emphasizes
The criteria for assessing the integrity of information in an electronic that the rule should be excluded or modified only by wording in
record is whether the information has remained complete and un- the standby that is specific and unambiguous; and
altered, apart from the addition of any endorsement and any change
iv. While the effect of all of these Rules may be varied by the text
which arises in the normal course of communication, storage, and of the standby, variations of the effect of some of these Rules
display. may disqualify the standby as an independent undertaking under
“Electronic signature” means letters, characters, numbers, or applicable law.
other symbols in electronic form, attached to or logically associated e. The phrase “stated in the standby” or the like refers to the actual
with an electronic record that are executed or adopted by a party with text of a standby (whether as issued or effectively amended) whereas
present intent to authenticate an electronic record. the phrase “provided in the standby” or the like refers to both the
“Receipt” occurs when: text of the standby and these Rules as incorporated.
i. an   electronic record enters in a form capable of being processed
by the information system designated in the standby, or
ii. an issuer retrieves an electronic record sent to an information
system other than that designated by the issuer.

1.10 Redundant or Otherwise Undesirable Terms

a. A standby should not or need not state that it is:

i. unconditional or abstract (if it does, it signifies merely that
payment under it is conditioned solely on presentation of speci-
fied documents);
ii. absolute (if it does, it signifies merely that it is irrevocable);
iii. primary (if it does, it signifies merely that it is the independent
obligation of the issuer);
iv. payable from the issuer’s own funds (if it does, it signifies
merely that payment under it does not depend on the availability
of applicant funds and is made to satisfy the issuer’s own inde-
pendent obligation);

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Rule 2 2.05 Advice of Standby or Amendment
a. Unless an advice states otherwise, it signifies that:
Obligations
i. the advisor has checked the apparent authenticity of the advised
message in accordance with standard letter of credit practice; and
2.01 Undertaking to Honor by Issuer and Any Confirmer to Benefi-
ii. the advice accurately reflects what has been received.
ciary b. A person who is requested to advise a standby and decides not to do
a. An issuer undertakes to the beneficiary to honor a presentation that so should notify the requesting party.
appears on its face to comply with the terms and conditions of the
standby in accordance with these Rules supplemented by standard 2.06 When an Amendment is Authorized and Binding
standby practice. a. If a standby expressly states that it is subject to “automatic amend-
b. An issuer honors a complying presentation made to it by paying the ment” by an increase or decrease in the amount available, an exten-
amount demanded of it at sight, unless the standby provides for sion of the expiration date, or the like, the amendment is effective
honor: automatically without any further notification or consent beyond that
i. by   acceptance of a draft drawn by the beneficiary on the issuer, expressly provided for in the standby. (Such an amendment may also
in which case the issuer honors by: be referred to as becoming effective “without amendment”.)
(a) timely accepting the draft; and b. If there is no provision for automatic amendment, an amendment binds:
(b) thereafter paying the holder of the draft on presentation of the i. the issuer when it leaves the issuer’s control; and
accepted draft on or after its maturity. ii. the confirmer when it leaves the confirmer’s control, unless the

ii. by deferred payment of a demand made by the beneficiary on the confirmer indicates that it does not confirm the amendment.
issuer, in which case the issuer honors by: c. If there is no provision for automatic amendment:
(a) timely incurring a deferred payment obligation; and i. the beneficiary must consent to the amendment for it to be binding;
(b) thereafter paying at maturity. ii. the beneficiary’s consent must be made by an express commu-

iii. by negotiation, in which case the issuer honors by paying the nication to the person advising the amendment unless the ben-
amount demanded at sight without recourse. eficiary presents documents which comply with the standby as
c. An issuer acts in a timely manner if it pays at sight, accepts a draft, amended and which would not comply with the standby prior to
or undertakes a deferred payment obligation (or if it gives notice of such amendment; and
dishonor) within the time permitted for examining the presentation iii. an amendment does not require the applicant’s consent to be
and giving notice of dishonor. binding on the issuer, the confirmer, or the beneficiary.
d. i.  A confirmer undertakes to honor a complying presentation made d. Consent to only part of an amendment is a rejection of the entire
to it by paying the amount demanded of it at sight or, if the amendment.
standby so states, by another method of honor consistent with
the issuer’s undertaking. 2.07 Routing of Amendments

ii. If the confirmation permits presentation to the issuer, then the a. An issuer using another person to advise a standby must advise all
confirmer undertakes also to honor upon the issuer’s wrongful amendments to that person.
dishonor by performing as if the presentation had been made to b. An amendment or cancellation of a standby does not affect the
the confirmer. issuer’s obligation to a nominated person that has acted within the

iii. If the standby permits presentation to the confirmer, then the scope of its nomination before receipt of notice of the amendment or
issuer undertakes also to honor upon the confirmer’s wrongful cancellation.
dis-honor by performing as if the presentation had been made to c. Non-extension of an automatically extendable (renewable) standby
the issuer. does not affect an issuer’s obligation to a nominated person who has
e. An issuer honors by paying in immediately available funds in the cur- acted within the scope of its nomination before receipt of a notice of
rency designated in the standby unless the standby states it is pay- non-extension.
able by:

i. payment of a monetary unit of account, in which case the under-
taking is to pay in that unit of account; or Rule 3
ii. delivery of other items of value, in which case the undertaking is
to deliver those items. Presentation
2.02 Obligation of Different Branches, Agencies, or Other Offices 3.01 Complying Presentation Under a Standby
For
 the purposes of these Rules, an issuer’s branch, agency, or other A standby should indicate the time, place and location within that
office acting or undertaking to act under a standby in a capacity other place, person to whom, and medium in which presentation should be
than as issuer is obligated in that capacity only and shall be treated made. If so, presentation must be so made in order to comply. To the
as a different person. extent that a standby does not so indicate, presentation must be
made in accordance with these Rules in order to be complying.
2.03 Conditions to Issuance
A standby is issued when it leaves an issuer’s control unless it clearly 3.02 What Constitutes a Presentation
specifies that it is not then “issued” or “enforceable”. Statements 
The receipt of a document required by and presented under a
that a standby is not “available”, “operative”, “effective”, or the standby constitutes a presentation requiring examination for compli-
like do not affect its irrevocable and binding nature at the time it ance with the terms and conditions of the standby even if not all of
leaves the issuer’s control. the required documents have been presented.

2.04 Nomination 3.03 Identification of Standby

a. A standby may nominate a person to advise, receive a presentation, a. A presentation must identify the standby under which the presenta-
effect a transfer, confirm, pay, negotiate, incur a deferred payment tion is made.
obligation, or accept a draft. b. A presentation may identify the standby by stating the complete ref-
b. Nomination does not obligate the nominated person to act except to erence number of the standby and the name and location of the
the extent that the nominated person undertakes to act. issuer or by attaching the original or a copy of the standby.
c. A nominated person is not authorized to bind the person making the c. If the issuer cannot determine from the face of a document received
nomination. that it should be processed under a standby or cannot identify the
standby to which it relates, presentation is deemed to have been
made on the date of identification.

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 3.04 Where and to Whom Complying Presentation Made e. If
 a demand exceeds the amount available under the standby, the
a. To comply, a presentation must be made at the place and any loca- drawing is discrepant. Any document other than the demand stating
tion at that place indicated in the standby or provided in these Rules. an amount in excess of the amount demanded is not discrepant for
b. If no place of presentation to the issuer is indicated in the standby, that reason.
presentation to the issuer must be made at the place of business f. Use of “approximately”, “about”, “circa”, or a similar word permits
from which the standby was issued. a tolerance not to exceed 10% more or 10% less of the amount to
c. If a standby is confirmed, but no place for presentation is indicated in which such word refers.
the confirmation, presentation for the purpose of obligating the con-
firmer (and the issuer) must be made at the place of business of the 3.09 Extend or Pay
confirmer from which the confirmation was issued or to the issuer. A beneficiary’s request to extend the expiration date of the standby
d. If no location at a place of presentation is indicated (such as depart- or, alternatively, to pay the amount available under it:
ment, floor, room, station, mail stop, post office box, or other loca- a. is a presentation demanding payment under the standby, to be exam-
tion), presentation may be made to: ined as such in accordance with these Rules; and
i. the general postal address indicated in the standby; b. implies that the beneficiary:
ii. any location at the place designated to receive deliveries of mail i.  consents to the amendment to extend the expiry date to the date
or documents; or requested;
iii. any person at the place of presentation actually or apparently ii. requests the issuer to exercise its discretion to seek the approval
authorized to receive it. of the applicant and to issue that amendment;
iii. upon issuance of that amendment, retracts its demand for pay-
3.05 When Timely Presentation Made ment; and
a. A presentation is timely if made at any time after issuance and before iv. consents to the maximum time available under these Rules for
expiry on the expiration date. examination and notice of dishonor.
b. A presentation made after the close of business at the place of pres-
entation is deemed to have been made on the next business day. 3.10 No Notice of Receipt of Presentation
An
 issuer is not required to notify the applicant of receipt of a pres-
3.06 Complying Medium of Presentation entation under the standby.
a. To comply, a document must be presented in the medium indicated
in the standby. 3.11 Issuer Waiver and Applicant Consent to Waiver of ­
b. Where no medium is indicated, to comply a document must be pre- Presentation Rules
sented as a paper document, unless only a demand is required, in In
 addition to other discretionary provisions in a standby or these
which case: Rules, an issuer may, in its sole discretion, without notice to or con-
i. a  demand that is presented via S.W.I.F.T., tested telex, or other sent of the applicant and without effect on the applicant’s obligations
similar authenticated means by a beneficiary that is a S.W.I.F.T. to the issuer, waive
participant or a bank complies; otherwise a. the following Rules and any similar terms stated in the standby which

ii. a demand that is not presented as a paper document does not are primarily for the issuer’s benefit or operational convenience:
comply unless the issuer permits, in its sole discretion, the use of i.  treatment of documents received, at the request of the presenter,
that medium. as having been presented at a later date (Rule 3.02);
c. A document is not presented as a paper document if it is communi- ii. identification of a presentation to the standby under which it is
cated by electronic means even if the issuer or nominated person presented (Rule 3.03(a));
receiving it generates a paper document from it. iii. where
 and to whom presentation is made (Rule 3.04(b), (c), and
d. Where presentation in an electronic medium is indicated, to comply (d)), except the country of presentation stated in the standby; or
a document must be presented as an electronic record capable of iv. treatment of a presentation made after the close of business as
being authenticated by the issuer or nominated person to whom it is if it were made on the next business day (Rule 3.05(b)).
presented. b. the following Rule but not similar terms stated in the standby:
i. a   required document dated after the date of its stated presenta-
3.07 Separateness of Each Presentation tion (Rule 4.06); or
a. Making a non-complying presentation, with-drawing a presentation, ii. the requirement that a document issued by the beneficiary be in
or failing to make any one of a number of scheduled or permitted the language of the standby (Rule 4.04).
presentations does not waive or otherwise prejudice the right to c. the following Rule relating to the operational integrity of the standby
make another timely presentation or a timely representation whether only in so far as the bank is in fact dealing with the true beneficiary:
or not the standby prohibits partial or multiple drawings or presenta- acceptance of a demand in an electronic medium (Rule 3.06(b)).
tions. Waiver by the confirmer requires the consent of the issuer with
b. Wrongful
 dishonor of a complying presentation does not constitute respect to paragraphs (b) and (c) of this Rule.
dishonor of any other presentation under a standby or repudiation of
the standby. 3.12 Original Standby Lost, Stolen, Mutilated, or Destroyed
c. Honor of a non-complying presentation, with or without notice of its a. If an original standby is lost, stolen, mutilated, or destroyed, the
non-compliance, does not waive requirements of a standby for other issuer need not replace it or waive any requirement that the original
presentations. be presented under the standby.
b. If the issuer agrees to replace an original standby or to waive a
3.08 P artial Drawing and Multiple Presentations; Amount of requirement for its presentation, it may provide a replacement or
Drawings copy to the beneficiary without affecting the applicant’s obligations to
a. A presentation may be made for less than the full amount available the issuer to reimburse, but, if it does so, the issuer must mark the
(“partial drawing”). replacement or copy as such. The issuer may, in its sole discretion,
b. More than one presentation (“multiple presentations”) may be require indemnities satisfactory to it from the beneficiary and assur-
made. ances from nominated persons that no payment has been made.
c. The statement “partial drawings prohibited” or a similar expres-
sion means that a presentation must be for the full amount available.
d. The statement “multiple drawings prohibited” or a similar expres-
sion means that only one presentation may be made and honored but
that it may be for less than the full amount available.

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Closure on Expiry Date 4.07 Required Signature on a Document
a. A required document need not be signed unless the standby indi-
3.13 Expiration Date on a Non-Business Day cates that the document must be signed or the document is of a type
a. If the last day for presentation stated in a standby (whether stated to that standard standby practice requires be signed.
be the expiration date or the date by which documents must be b. A required signature may be made in any manner that corresponds
received) is not a business day of the issuer or nominated person to the medium in which the signed document is presented.
where presentation is to be made, then presentation made there on c. Unless a standby specifies:
the first following business day shall be deemed timely.
i. the   name of a person who must sign a document, any signature
b. A  nominated person to whom such a presentation is made must so or authentication will be regarded as a complying signature.
notify the issuer. ii. the status of a person who must sign, no indication of status is
necessary.
3.14 C losure on a Business Day and Authorization of Another Rea- d. If a standby specifies that a signature must be made by:
sonable Place for Presentation
i. a  named natural person without requiring that the signer’s status
a. If on the last business day for presentation the place for presentation be identified, a signature complies that appears to be that of the
stated in a standby is for any reason closed and presentation is not named person;
timely made because of the closure, then the last day for presenta-
ii. a named legal person or government agency without identifying
tion is automatically extended to the day occurring thirty calendar who is to sign on its behalf or its status, any signature complies
days after the place for presentation reopens for business, unless the that appears to have been made on behalf of the named legal
standby otherwise provides. person or government agency; or
b. Upon or in anticipation of closure of the place of presentation, an
iii. a named natural person, legal person, or government agency
issuer may authorize another reasonable place for presentation in the requiring the status of the signer be indicated, a signature com-
standby or in a communication received by the beneficiary. If it does plies which appears to be that of the named natural person, legal
so, then person, or government agency and indicates its status.
i. presentation must be made at that reasonable place; and
ii. if the communication is received fewer than thirty calendar days 4.08 Demand Document Implied
before the last day for presentation and for that reason presenta- If a standby does not specify any required document, it will still be
tion is not timely made, the last day for presentation is automati- deemed to require a documentary demand for payment.
cally extended to the day occurring thirty calendar days after the
last day for presentation. 4.09 Identical Wording and Quotation Marks
If a standby requires:
a. a statement without specifying precise wording, then the wording in
Rule 4 the document presented must appear to convey the same meaning
as that required by the standby;
Examination b. specified wording by the use of quotation marks, blocked wording, or
an attached exhibit or form, then typographical errors in spelling,
4.01 Examination for Compliance punctuation, spacing, or the like that are apparent when read in con-
a. Demands
 for honor of a standby must comply with the terms and text are not required to be duplicated and blank lines or spaces for
conditions of the standby. data may be completed in any manner not inconsistent with the
b. Whether a presentation appears to comply is determined by exam- standby; or
ining the presentation on its face against the terms and conditions c. specified wording by the use of quotation marks, blocked wording, or
stated in the standby as interpreted and supplemented by these an attached exhibit or form, and also provides that the specified
Rules which are to be read in the context of standard standby prac- wording be “exact” or “identical”, then the wording in the docu-
tice. ments presented, including typographical errors in spelling, punctua-
tion, spacing and the like, as well as blank lines and spaces for data,
4.02 Non-Examination of Extraneous Documents must be exactly reproduced.
Documents
 presented which are not required by the standby need
not be examined and, in any event, shall be disregarded for purposes 4.10 Applicant Approval
of determining compliance of the presentation. They may without A
 standby should not specify that a required document be issued,
responsibility be returned to the presenter or passed on with the signed, or counter-signed by the applicant. However, if the standby
other documents presented. includes such a requirement, the issuer may not waive the require-
ment and is not responsible for the applicant’s withholding of the
4.03 Examination for Inconsistency document or signature.
An issuer or nominated person is required to examine documents for
inconsistency with each other only to the extent provided in the 4.11 Non-Documentary Terms or Conditions
standby. a. A standby term or condition which is non-documentary must be dis-
regarded whether or not it affects the issuer’s obligation to treat a
4.04 Language of Documents presentation as complying or to treat the standby as issued,
The language of all documents issued by the beneficiary is to be that amended, or terminated.
of the standby. b. Terms or conditions are non-documentary if the standby does not
require presentation of a document in which they are to be evidenced
4.05 Issuer of Documents and if their fulfillment cannot be determined by the issuer from the
Any required document must be issued by the beneficiary unless the issuer’s own records or within the issuer’s normal operations.
standby indicates that the document is to be issued by a third person c. Determinations from the issuer’s own records or within the issuer’s
or the document is of a type that standard standby practice requires normal operations include determinations of:
to be issued by a third person. i. when,
 where, and how documents are presented or otherwise
delivered to the issuer;
4.06 Date of Documents
ii. when, where, and how communications affecting the standby are
The issuance date of a required document may be earlier but not later sent or received by the issuer, beneficiary, or any nominated
than the date of its presentation. person;

iii. amounts transferred into or out of accounts with the issuer; and
iv. amounts determinable from a published index (e.g., if a standby
provides for determining amounts of interest accruing according
to published interest rates).

5
 d. An
 issuer need not recompute a beneficiary’s computations under a c. A demand may be in the form of a draft or other instruction, order, or
formula stated or referenced in a standby except to the extent that request to pay. If a standby requires presentation of a “draft” or “bill
the standby so provides. of exchange”, that draft or bill of exchange need not be in negoti-
able form unless the standby so states.
4.12 Formality of Statements in Documents
a. A required statement need not be accompanied by a solemnity, offi- 4.17 Statement of Default or Other Drawing Event
cialization, or any other formality. If a standby requires a statement, certificate, or other recital of a
b. If a standby provides for the addition of a formality to a required state- default or other drawing event and does not specify content, the
ment by the person making it without specifying form or content, the document complies if it contains:
statement complies if it indicates that it was declared, averred, war- a. a representation to the effect that payment is due because a drawing
ranted, attested, sworn under oath, affirmed, certified, or the like. event described in the standby has occurred;
c. If a standby provides for a statement to be witnessed by another b. a date indicating when it was issued; and
person without specifying form or content, the witnessed statement c. the beneficiary’s signature.
complies if it appears to contain a signature of a person other than
the beneficiary with an indication that the person is acting as a wit- 4.18 Negotiable Documents
ness. If a standby requires presentation of a document that is transferable
d. If a standby provides for a statement to be counter-signed, legalized, by endorsement and delivery without stating whether, how, or to
visaed, or the like by a person other than the beneficiary acting in a whom endorsement must be made, then the document may be pre-
governmental, judicial, corporate, or other representative capacity sented without endorsement, or, if endorsed, the endorsement may
without specifying form or content, the statement complies if it con- be in blank and, in any event, the document may be issued or nego-
tains the signature of a person other than the beneficiary and includes tiated with or without recourse.
an indication of that person’s representative capacity and the organ-
ization on whose behalf the person has acted. 4.19 Legal or Judicial Documents
If
 a standby requires presentation of a government-issued document,
4.13 No Responsibility to Identify Beneficiary a court order, an arbitration award, or the like, a document or a copy
Except to the extent that a standby requires presentation of an elec- is deemed to comply if it appears to be:
tronic record: i. issued by a government agency, court, tribunal, or the like;
a. a person honoring a presentation has no obligation to the applicant ii. suitably titled or named;
to ascertain the identity of any person making a presentation or any iii. signed;
assignee of proceeds; iv. dated; and
b. 
payment to a named beneficiary, transferee, an acknowledged v. originally
 certified or authenticated by an official of a government
assignee, successor by operation of law, to an account or account agency, court, tribunal, or the like.
number stated in the standby or in a cover instruction from the ben-
eficiary or nominated person fulfills the obligation under the standby 4.20 Other Documents
to effect payment. a. If a standby requires a document other than one whose content is
specified in these Rules without specifying the issuer, data content,
4.14 Name of Acquired or Merged Issuer or Confirmer or wording, a document complies if it appears to be appropriately
If
 the issuer or confirmer is reorganized, merged, or changes its titled or to serve the function of that type of document under standard
name, any required reference by name to the issuer or confirmer in standby practice.
the documents presented may be to it or its successor. b. A document presented under a standby is to be examined in the
context of standby practice under these Rules even if the document
4.15 Original, Copy, and Multiple Documents is of a type (such as a commercial invoice, transport documents, in­­
a. A presented document must be an original. surance documents or the like) for which the Uniform Customs and
b. Presentation of an electronic record, where an electronic presenta- Practice for Documentary Credits contains detailed rules.
tion is permitted or required is deemed to be an “original”.
c. i. A presented document is deemed to be an “original” unless it 4.21 Request to Issue Separate Undertaking
appears on its face to have been reproduced from an original. If a standby requests that the beneficiary of the standby issue its own
ii. A document which appears to have been reproduced from an separate undertaking to another (whether or not the standby recites
original is deemed to be an original if the signature or authentica- the text of that undertaking):
tion appears to be original. a. the beneficiary receives no rights other than its rights to draw under
d. A standby that requires presentation of a “copy” permits presenta- the standby even if the issuer pays a fee to the beneficiary for issuing
tion of either an original or copy unless the standby states that only the separate undertaking;
a copy be presented or otherwise addresses the disposition of all b. 
neither the separate undertaking nor any documents presented
originals. under it need be presented to the issuer; and
e. If multiples of the same document are requested, only one must be c. if originals or copies of the separate undertaking or documents pre-
an original unless: sented under it are received by the issuer although not required to be
i. “duplicate
 originals” or “multiple originals” are requested in presented as a condition to honor of the standby:
which case all must be originals; or
i. the  issuer need not examine, and, in any event, shall disregard
ii. “two copies”, “two-fold”, or the like are requested in which case their compliance or consistency with the standby, with the benefi-
either originals or copies may be presented. ciary’s demand under the standby, or with the beneficiary’s sepa-
rate undertaking; and

ii. the issuer may without responsibility return them to the presenter
Standby Document Types or forward them to the applicant with the presentation.

4.16 Demand for Payment

a. A demand for payment need not be separate from the beneficiary’s
statement or other required document.
b. If a separate demand is required, it must contain:

i. a demand for payment from the beneficiary directed to the issuer
or nominated person;
ii. a date indicating when the demand was issued;

iii. the amount demanded; and
iv. the beneficiary’s signature.

6
Rule 5
iii. the
 issuer is not obligated to waive the discrepancy even if the
applicant waives it; and
Notice, preclusion, and disposition of documents
iv. the issuer must hold the documents until it receives a response
from the applicant or is requested by the presenter to return the
5.01 Timely Notice of Dishonor documents, and if the issuer receives no such response or
a. Notice of dishonor must be given within a time after presentation of request within ten business days of its notice of dishonor, it may
documents which is not unreasonable. return the documents to the presenter.
i. Notice given within three business days is deemed to be not
unreasonable and beyond seven business days is deemed to be 5.07 Disposition of Documents
unreasonable. Dishonored documents must be returned, held, or disposed of as

ii. Whether the time within which notice is given is unreasonable reasonably instructed by the presenter. Failure to give notice of the
does not depend upon an imminent deadline for presentation. disposition of documents in the notice of dishonor does not preclude

iii. The time for calculating when notice of dishonor must be given the issuer from asserting any defense otherwise available to it against
begins on the business day following the business day of presen- honor.
tation.
iv. Unless a standby otherwise expressly states a shortened time 5.08 Cover Instructions/Transmittal Letter
within which notice of dishonor must be given, the issuer has no a. Instructions accompanying a presentation made under a standby
obligation to accelerate its examination of a presentation. may be relied on to the extent that they are not contrary to the terms
b. i. The means by which a notice of dishonor is to be given is by or conditions of the standby, the demand, or these Rules.
telecommunication, if available, and, if not, by another available b. Representations made by a nominated person accompanying a pres-
means which allows for prompt notice. entation may be relied upon to the extent that they are not contrary

ii. If notice of dishonor is received within the time permitted for to the terms or conditions of a standby or these Rules.
giving the notice, then it is deemed to have been given by prompt c. 
Notwithstanding receipt of instructions, an issuer or nominated
means. person may pay, give notice, return the documents, or otherwise deal
c. Notice of dishonor must be given to the person from whom the doc- directly with the presenter.
uments were received (whether the beneficiary, nominated per­son, d. A statement in the cover letter that the documents are discrepant
or person other than a delivery person) except as otherwise requested does not relieve the issuer from examining the presentation for com-
by the presenter. pliance.

5.02 Statement of Grounds for Dishonor 5.09 Applicant Notice of Objection

A notice of dishonor shall state all discrepancies upon which dishonor a. An applicant must timely object to an issuer’s honor of a noncom-
is based. plying presentation by giving timely notice by prompt means.
b. An applicant acts timely if it objects to discrepancies by sending a
5.03 Failure to Give Timely Notice of Dishonor notice to the issuer stating the discrepancies on which the objection
a. Failure to give notice of a discrepancy in a notice of dishonor within is based within a time after the applicant’s receipt of the documents
the time and by the means specified in the standby or these rules which is not unreasonable.
precludes assertion of that discrepancy in any document containing c. Failure to give a timely notice of objection by prompt means pre-
the discrepancy that is retained or represented, but does not pre- cludes assertion by the applicant against the issuer of any discrep-
clude assertion of that discrepancy in any different presentation ancy or other matter apparent on the face of the documents received
under the same or a separate standby. by the applicant, but does not preclude assertion of that objection to
b. Failure to give notice of dishonor or acceptance or acknowledgment any different presentation under the same or a different standby.
that a deferred payment undertaking has been incurred obligates the
issuer to pay at maturity.
Rule 6
5.04 Notice of Expiry
Failure to give notice that a presentation was made after the expira- Transfer, assignment, and transfer by operation of law
tion date does not preclude dishonor for that reason. Transfer of Drawing Rights
5.05 Issuer Request for Applicant Waiver without Request by 6.01 Request to Transfer Drawing Rights
Presenter Where a beneficiary requests that an issuer or nominated person
If the issuer decides that a presentation does not comply and if the honor a drawing from another person as if that person were the
presenter does not otherwise instruct, the issuer may, in its sole beneficiary, these Rules on transfer of drawing rights (“transfer”)
discretion, request the applicant to waive non-compliance or other- apply.
wise to authorize honor within the time available for giving notice of
dishonor but without extending it. Obtaining the applicant’s waiver 6.02 When Drawing Rights are Transferable
does not obligate the issuer to waive non-compliance. a. A standby is not transferable unless it so states.
b. A standby that states that it is transferable without further provision
5.06 Issuer Request for Applicant Waiver upon Request of means that drawing rights:
Presenter i. may  be transferred in their entirety more than once;
If, after receipt of notice of dishonor, a presenter requests that the ii. may not be partially transferred; and
presented documents be forwarded to the issuer or that the issuer iii. may not be transferred unless the issuer (including the confirmer)
seek the applicant’s waiver: or another person specifically nominated in the standby agrees to
a. no person is obligated to forward the discrepant documents or seek and effects the transfer requested by the beneficiary.
the applicant’s waiver;
b. the presentation to the issuer remains subject to these Rules unless 6.03 Conditions to Transfer
departure from them is expressly consented to by the presenter; and An
 issuer of a transferable standby or a nominated person need not
c. if the documents are forwarded or if a waiver is sought: effect a transfer unless:
i. the presenter is precluded from objecting to the discrepancies a. it is satisfied as to the existence and authenticity of the original
notified to it by the issuer; standby; and
ii. the issuer is not relieved from examining the presentation under
these Rules;

7
 b. the beneficiary submits or fulfills:
v. statements
  regarding the legality and relative priority of the

i. a request in a form acceptable to the issuer or nominated person assignment; or
including the effective date of the transfer and the name and
vi. right of recovery by the issuer or nominated person of any pro-
address of the transferee; ceeds received by the assignee that are recoverable from the

ii. the original standby; beneficiary;
iii. verification
 of the signature of the person signing for the benefi- e. payment of a fee for the acknowledgment; and
ciary; f. fulfillment of other reasonable requirements.
iv. verification of the authority of the person signing for the benefi-
ciary; 6.09 Conflicting Claims to Proceeds
v. payment of the transfer fee; and 
If there are conflicting claims to proceeds, then payment to an

vi. any other reasonable requirements. acknowledged assignee may be suspended pending resolution of the
conflict.
6.04 Effect of Transfer on Required Documents
Where there has been a transfer of drawing rights in their entirety: 6.10 Reimbursement for Payment Based on an Assignment
a. a draft or demand must be signed by the transferee beneficiary; and An issuer or nominated person paying under an acknowledged

b. the name of the transferee beneficiary may be used in place of the assignment pursuant to Rule 6.08(a) and (b) is entitled to reimburse-
name of the transferor beneficiary in any other required document. ment as if it had made payment to the beneficiary. If the beneficiary
is a bank, the acknowledgment may be based solely upon an authen-
6.05 Reimbursement for Payment Based on a Transfer ticated communication.
An issuer or nominated person paying under a transfer pursuant to
Rule 6.03(a), (b)(i), and (b)(ii) is entitled to reimbursement as if it had
made payment to the beneficiary. Transfer by 0peration of Law

6.11 Transferee by Operation of Law

Acknowledgment of Assignment of Proceeds Where
 an heir, personal representative, liquidator, trustee, receiver,
successor corporation, or similar person who claims to be designated
6.06 Assignment of Proceeds by law to succeed to the interests of a beneficiary presents docu-
Where
 an issuer or nominated person is asked to acknowledge a ments in its own name as if it were the authorized transferee of the
beneficiary’s request to pay an assignee all or part of any proceeds beneficiary, these Rules on transfer by operation of law apply.
of the beneficiary’s drawing under the standby, these Rules on
acknowledgment of an assignment of proceeds apply except where 6.12 A dditional Document in Event of Drawing in Successor’s
applicable law otherwise requires. Name
A
 claimed successor may be treated as if it were an authorized trans-
6.07 Request for Acknowledgment feree of a beneficiary’s drawing rights in their entirety if it presents an
a. Unless applicable law otherwise requires, an issuer or nominated additional document or documents which appear to be issued by a
person public official or representative (including a judicial officer) and indi-
i. is not obligated to give effect to an assignment of proceeds which cate:
it has not acknowledged; and a. that the claimed successor is the survivor of a merger, consolidation,
ii. is not obligated to acknowledge the assignment. or similar action of a corporation, limited liability company, or other
b. If an assignment is acknowledged: similar organization;

i. the acknowledgment confers no rights with respect to the b. that the claimed successor is authorized or appointed to act on behalf
standby to the assignee who is only entitled to the proceeds of the named beneficiary or its estate because of an insolvency pro-
assigned, if any, and whose rights may be affected by amend- ceeding;
ment or cancellation; and c. that the claimed successor is authorized or appointed to act on behalf
ii. the rights of the assignee are subject to: of the named beneficiary because of death or incapacity; or
(a) the existence of any net proceeds payable to the beneficiary d. that the name of the named beneficiary has been changed to that of
by the person making the acknowledgment; the claimed successor.
(b) rights of nominated persons and transferee beneficiaries;
(c) rights of other acknowledged assignees; and 6.13 Suspension of Obligations upon Presentation by Successor
(d) any other rights or interests that may have priority under An issuer or nominated person which receives a presentation from a
applicable law. claimed successor which complies in all respects except for the
name of the beneficiary:
6.08 Conditions to Acknowledgment of Assignment of Proceeds a. may request in a manner satisfactory as to form and substance:
An
 issuer or nominated person may condition its acknowledgment on i. a legal opinion;
receipt of:
ii. an additional document referred to in Rule 6.12 (Additional Doc-
a. the original standby for examination or notation; ument in Event of Drawing in Successor’s Name) from a public
b. verification of the signature of the person signing for the beneficiary; official;
c. verification of the authority of the person signing for the beneficiary; iii. statements, covenants, and indemnities regarding the status of
d. an irrevocable request signed by the beneficiary for acknowledgment the claimed successor as successor by operation of law;
of the assignment that includes statements, covenants, indemnities, iv. payment of fees reasonably related to these determinations; and
and other provisions which may be contained in the issuer’s or nom-
v. anything
 which may be required for a transfer under Rule 6.03
inated person’s required form requesting acknowledgment of assign- (Conditions to Transfer) or an acknowledgment of assignment of
ment, such as: proceeds under Rule 6.08 (Conditions to Acknowledgment of
i. the identity of the affected drawings if the standby permits mul- Assignment of Proceeds);
tiple drawings; but
 such documentation shall not constitute a required document
ii. the full name, legal form, location, and mailing address of the for purposes of expiry of the standby.
beneficiary and the assignee; b. Until the issuer or nominated person receives the requested docu-

iii. details of any request affecting the method of payment or delivery mentation, its obligation to honor or give notice of dishonor is sus-
of the standby proceeds; pended, but any deadline for presentation of required documents is
iv. limitation on partial assignments and prohibition of successive not thereby extended.
assignments;

8
6.14 R
 eimbursement for Payment Based on a Transfer by 8.03 Refund of Reimbursement
Operation of Law A
 nominated person that obtains reimbursement before the issuer
An issuer or nominated person paying under a transfer by operation timely dishonors the presentation must refund the reimbursement
of law pursuant to Rule 6.12 (Additional Document in Event of with interest if the issuer dishonors. The refund does not preclude the
Drawing in Successor’s Name) is entitled to reimbursement as if it nominated person’s wrongful dishonor claims.
had made payment to the beneficiary.
8.04 Bank-to-Bank Reimbursement
Any instruction or authorization to obtain reimbursement from another
Rule 7 bank is subject to the International Chamber of Commerce standard
rules for bank-to-bank reimbursements.
Cancellation

7.01 When an Irrevocable Standby is Cancelled or Terminated Rule 9

A
 beneficiary’s rights under a standby may not be cancelled without
its consent. Consent may be evidenced in writing or by an action such Timing
as return of the original standby in a manner which implies that the
9.01 Duration of Standby
beneficiary consents to cancellation. A beneficiary’s consent to can-
A standby must:
cellation is irrevocable when communicated to the issuer.
a. contain an expiry date; or
b. permit the issuer to terminate the standby upon reasonable prior
7.02 Issuer’s Discretion Regarding a Decision to Cancel
notice or payment.
Before acceding to a beneficiary’s authorization to cancel and treating
the standby as cancelled for all purposes, an issuer may require in a
9.02 Effect of Expiration on Nominated Person
manner satisfactory as to form and substance:
The
 rights of a nominated person that acts within the scope of its
a. the original standby;
nomination are not affected by the subsequent expiry of the standby.
b. verification of the signature of the person signing for the beneficiary;
c. verification of the authorization of the person signing for the benefi-
9.03 Calculation of Time
ciary;
a. A period of time within which an action must be taken under these
d. a legal opinion;
Rules begins to run on the first business day following the business
e. an irrevocable authority signed by the beneficiary for cancellation that
day when the action could have been undertaken at the place where
includes statements, covenants, indemnities, and similar provisions
the action should have been undertaken.
contained in a required form;
b. An extension period starts on the calendar day following the stated
f. satisfaction that the obligation of any confirmer has been cancelled;
expiry date even if either day falls on a day when the issuer is closed.
g. satisfaction that there has not been a transfer or payment by any
nominated person; and
9.04 Time of Day of Expiration
h. any other reasonable measure.
If no time of day is stated for expiration, it occurs at the close of busi-
ness at the place of presentation.
Rule 8
9.05 Retention of Standby
Reimbursement obligations Retention
 of the original standby does not preserve any rights under
the standby after the right to demand payment ceases.
8.01 Right to Reimbursement
a. Where payment is made against a complying presentation in accord-
ance with these Rules, reimbursement must be made by: Rule 10
i. an applicant to an issuer requested to issue a standby; and
ii. an issuer to a person nominated to honor or otherwise give value. Syndication/participation
b. An applicant must indemnify the issuer against all claims, obligations,
and responsibilities (including attorney’s fees) arising out of: 10.01 Syndication
i. the imposition of law or practice other than that chosen in the If
 a standby with more than one issuer does not state to whom pres-
standby or applicable at the place of issuance; entation may be made, presentation may be made to any issuer with
ii. the fraud, forgery, or illegal action of others; or binding effect on all issuers.
iii. the issuer’s performance of the obligations of a confirmer that
wrongfully dishonors a confirmation. 10.02 Participation
c. This Rule supplements any applicable agreement, course of dealing, a. Unless otherwise agreed between an applicant and an issuer, the
practice, custom or usage providing for reimbursement or indemnifi- issuer may sell participations in the issuer’s rights against the appli-
cation on lesser or other grounds. cant and any presenter and may disclose relevant applicant informa-
tion in confidence to potential participants.
8.02 Charges for Fees and Costs b. An issuer’s sale of participations does not affect the obligations of the
a. An applicant must pay the issuer’s charges and reimburse the issuer issuer under the standby or create any rights or obligations between
for any charges that the issuer is obligated to pay to persons nomi- the beneficiary and any participant.
nated with the applicant’s consent to advise, confirm, honor, nego-
tiate, transfer, or to issue a separate undertaking.
b. An issuer is obligated to pay the charges of other persons:

i. if they are payable in accordance with the terms of the standby;
or

ii. if they are the reasonable and customary fees and expenses of
a person requested by the issuer to advise, honor, negotiate,
transfer, or to issue a separate undertaking, and they are unre-
covered and unrecoverable from the beneficiary or other pre-
senter because no demand is made under the standby.