INTERNATIONAL STANDBY PRACTICES (ISP98

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IMPORTANT AND SALIENT FEATURES OF ISP 98

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ISP 98 Rule 1
‡ Rule 1.05 © Affirmatively states that ISP 98 does not provide for defenses to honour based on fraud or forgery or any reference to local law. ‡ Rule 1.08 (b) States that an issuer is not responsible for the ³accuracy´, genuineness, or effect of any document presented under the Standby.
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03 The credit is binding on the issuer when it leaves the issuer¶s control unless it clearly specifies that it is not ³ISSUED´ or ³ENFORCEABLE´. ‡ Rule 2.ISP 98 Rule 2 ‡ Rule 2.06 Amendment is binding on the issuer when it leaves the issuer¶s control and the beneficiary is not bound by the amendment until it consents to it. 3 .

if the credit expressly permit such amendments.) ‡ Rule 2.06 (c) The beneficiary is deemed to have accepted an amendment by making a presentation complying with the amendment only if the presentation as made would not have complied with the original standby.06(a) Clearly permit automatic amendments without the consent of the beneficiary. 4 . ‡ Rule 2.ISP 98 Rule 2 (Contd.

ISP 98 Rule 3 ‡ Rule 3.03 A presentation that fails to identify the Standby which the presentation is made is not deemed presented until the date on which the issuer is able to match the presentation to the correct Standby. ‡ Rule 3.07 Wrongful dishonour of a complying presentation does not constitute dishonour of any other presentation. 5 .

) ‡ Rule 3.12 States that the issuer is under no obligation to replace a lost. mutilated or destroyed credit or to waive any requirement that the original of the credit be presented with any draw under the credit. stolen.08 Recognises that a Standby may provide for partial and multiple drawings and sets forth certain rules that should be consulted if the credit will permit partial or multiple drawings and will be subject to ISP 98. 6 . ‡ Rule 3.ISP 98 Rule 3 (Contd..

.) ‡ Rule 3. then the last day for presentation is automatically extended to the day occurring 30 calendar days after the place for presentation reopens for business.ISP 98 Rule 3 (Contd. If on the last banking day for presentation the place for presentation is stated in a SBLC is for any reason closed and the presentation is not timely because of the closure. under the SBLC otherwise provides. ‡ Rule 3. 7 .14 Is highly favourable to beneficiary. the presentation is deemed timely if made on the first following business day.13 Provides that if the expiration date or the last day for presentation stated in a Standby is not a business day of the issuer.

03 Expressly disavows any requirement to examine documents for inconsistency except to the extent required by the terms of standby. but the omission of the consistency review should not be of major concern to applicants for standby credits.01 The issuer must examine the presentation on its face against the terms and conditions stated in the Standby as interpreted and supplemented by these rules which are to be read in the context of standard standby practices. ‡ Rule 4.ISP 98 Rule 4 ‡ Rule 4. when the documentation to be presented to draw under the credit is spelled out in detail in the credit. 8 . ³It is reasonable to expect that Banks will resist any requirement in a credit relating to documentary consistency.

‡ Rule 4. No such requirement is applicable to third party documents.ISP 98 Rule 4 (Contd.05 Each required document must be issued by the beneficiary unless the standby otherwise states or the standard standby practice requires that it be issued by a third party 9 .) ‡ Rule 4.04 The language of each document issued by the beneficiary must be in the language of standby. but examiners of the presentations under standby¶s have no obligation to translate documents not in the language of the standby..

11 Provides that non-documentary conditions must be ignored.) ‡ Rule 4.ISP 98 Rule 4 (Contd. ‡ Rule 4. 10 .07 A required document need not be signed under the credit or standby practice so requires.08 A presentation must include a documentary demand for payment even if the standby is salient on the subject.. The correct approach is to avoid non-documentary conditions entirely. ‡ Rule 4.

11 (d) If the credit requires computations under a formula.13 The issuer has no obligation to the applicant to ascertain the destiny of any person making a presentation or any assignee of proceeds unless the standby requires presentation of an electronic record.ISP 98 Rule 4 (Contd.) ‡ Rule 4. the issuer has no obligation to verify the beneficiary¶s calculations under the standby so requires ‡ Rule 4.. 11 .

12 .ISP 98 Rule 4 (Contd.17 If a standby requires a certificate of default and does not specify content.15 All presented documents must be ³Originals´ unless standby specifies that a copy is permissible.. ‡ Rule 4. the certificate must contain a representation that payment is due because a drawing event described in the standby has occurred.) ‡ Rule 4.

13 .. issued document forming a part of a presentation must be originally certified or authenticated by an official of the issuing agency.ISP 98 Rule 4 (Contd.19 Any Govt.) ‡ Rule 4.

‡ Rule 5.01 (a) (iv) Limits the scope of ³reasonableness´ requirement by stating that the issuer has no obligation to accelerate its examination of documents within the 7 days period under the credit specifies a shortened time for giving of notice of dishonour.ISP 98 Rule 5 ‡ Rule 5. ‡ ISP 98 does not require that notice of dishonour be given to any person other than the presenter unless otherwise requested by the presenter. 14 .01 Notice of dishonour must be given within a time after presentation of documents ³which is not unreasonable´ with notice given with 3 business days following the date of presentation being deemed un-reasonable.

by other ³prompt´ means.04 Permits an issuer to give at any time notice that the presentation was discrepant because it was made after the expiration of the last date for presentation (or after expiry of the credit). 15 ..01 (b) (i) Requires that notice of dishonour be given by telecommunication. or not possible.) ‡ Rule 5.ISP 98 Rule 5 (Contd. ‡ Rule 5.

06 Beneficiary under a ISP 98 credit also need to remember that if the issuer dishonours a presentation and the beneficiary then requests the issuer to seek from the applicant a waiver of the non-complying document..ISP 98 Rule 5 (Contd.06© (i) to have waived any right it might otherwise have had to claim that the dishonour was improper under the terms of credit.) ‡ Rule 5. 16 . the beneficiary is deemed under Rule 5.

17 . an applicant must timely object(using ³prompt´ means) to an issuer¶s honour of a non-complying presentation or forfeit the opportunity of objecting.) ‡ Rule 5.ISP 98 Rule 5 (Contd..09 If the discrepancy is apparent on the face of the document.

‡ Rule 6. ‡ Rule 6.03 (b) (ii) Expressly requires presentation of the original credit as a condition to transfer.02 Permits multiple transfers but prohibits partial transfers unless the underlying credit expressly provides otherwise. 18 .03 Gives the issuer significant ability to define the conditions applicable to a transfer to the extent not otherwise specified in the standby although any conditions beyond those expressly set forth in Rule 6.03 must be reasonable.ISP 98 Rule 6 ‡ Rule 6.

11 to 6.14 Make specific provision for transfer of rights of a beneficiary under a credit by operation of law.ISP 98 Rule 6 (Contd.. ‡ Rule 6.) ‡ Rule 6.06 to 6.10 Also deal at some length with assignment of proceeds under a credit. 19 .

01 (b) States that the applicant must indemnify the issuer against the consequences of the fraud. 20 . forgery or illegal action of others.ISP 98 Rule 8 ‡ Rule 8.

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