In practical law the international standby practice (ISP98) is widely used worldwide as a rules in international trade. Whereas Uniform Rules of Demand Guarantee (URDG75) is used for demand guarantee and Uniform Customs Practices (UCP600) are used in documentary letter of credits, ISP are used for standby Letter of Credit for the purpose to support payment, both in guarantying default and succeed performances.
In the USA, guarantee bond is not allowed to guarantee any payment. In addition, UCP mostly emphasised in the rules that is related to customs; the activity of export and import with the letter of credits as its instruments. Thus, in 1998 through International Chamber of Commerce, this set of rules was released to govern the rights and obligations of any parties in the standby letter of credit. There are a couple of points which is not ruled by UCP but coved by ISP98. Such as automatic extension, transfer on demand and separate undertaking. In ISP98 if it is explicitly states that it is subject to automatic amendment, thus the amendment is automatically valid without any consent. The amendment is not only limited in the increase or decrease of the amount but including expiration date extension and etcetera. As it is automatically extending, the amendment may also become effective “without amendment” clearly states. Just like others documents, the nature characteristics of standby letter of credit is unconditional and irrevocable. As a standby it is not transferable automatically just like the amendment rule. A standby is transferable if it states so. Furthermore, if there is no more information regarding the statement of transferable the withdraw means; may be transferred in their entirely more than once or may not be partially transferred. *The more detail discussion of ISP98 will be continued.
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