International Standby Practices (ISP98) offers a precise and detailed framework for practitioners dealing with standby letters of credit. The current version is ISP98, ICC Publication No For information on ISP98 and standby letters of credit, see Practice note, Bonds, guarantees and standby. The 89 Rules in International Standby Practices (ISP98) offer a precise and detailed framework for practitioners dealing with standby letters of credit. Developed.
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See also Rule 9. The issuer may want to state that it is not bound to effect a transfer where the transfer would violate any applicable law or regulation. If the letter of credit requires presentation of negotiable documents, instruments or certificates, the letter of isp8 should specify whether, how or to whom endorsement must be made, otherwise endorsement will not be required. Like the UCP for commercial credits, ISP98 is destined to become the industry standard for the use of standbys isp9 international transactions.
It does not, however, change the “stated expiration date” to that first following business day.
This risk is greatest where there are multiple nominated persons, as is the case with a freely negotiable credit. Therefore, if the letter of credit provides that its January 31, expiration date will be automatically extended for another year on each anniversary of its expiration date, it should be clear that the successive expiration dates will be January 31,January 31,January 31,January 31,etc.
Issuer may want an express provision that it is not obligated to effect an assignment where prohibited by any applicable law or regulation or where it is not required by any applicable law or regulation to effect an assignment. Of course, all drawing requirements should be stated clearly and precisely to minimize the possibility of dispute.
No need to state that letter of credit is irrevocable, or that issuer’s obligations are independent and not iap98 on payment by applicant or anyone else. ISP98 provides ammunition to argue for the deletion from standby letters of credit of the terms “unconditional,” “absolute,” “primary,” “clear,” “payable on demand,” and “payable from the issuer’s own funds.
ISP98 is expected to become widely used for standby letters of credit commencing January 1, Consider dispute resolution mechanisms. If the letter of credit permits the presentation of only “copies” see Rule 4.
Letter of credit application should provide for applicant consent to choice of 15P98, governing law and any dispute resolution mechanism in the letter of credit. Issuers need to realize that they may be obligated under certain circumstances to honor a presentation by a claimed successor to the beneficiary. It also provides that taking beyond seven business days is deemed unreasonable. Other ADR alternative dispute resolutione.
Getting Ready for ISP98: The New International Standby Practices
Avoid use of terms such as “presentation must be made at our counters” unless the meaning is clear from the context. Beneficiaries may also request a provision stating the consequences if the issuer fails to reopen for business within a specified time period.
See Article 1 opt-out. If different requirements are desired, they should be stated in the letter of credit.
Sign up for our newsletter: An invaluable source of practical information for trade finance professionals and academics! Applicant may want to limit Rule 1. Drafting and Negotiating International Commercial Contracts. In addition to functional definitions, ISP98 addresses obligations, presentation, examination of documents, notice and preclusion, transfer, assignment, and transfer by operation of law, reimbursement obligations, and idp98.
Do not say “partial drawings prohibited” unless the beneficiary is only permitted to draw once for the full amount. This paper, which is adapted from a presentation to the American Bar Association Subcommittee on Letters of Credit, focuses on ISP98 provisions that may lead to changes in forms of standby letters of credit and reimbursement agreements, that may lead to changes in standby practices, that may alert parties to issues they had not previously focused upon, or that parties may wish to limit or vary.
Getting Ready for ISP The New International Standby Practices – FindLaw
A cover instruction accompanying the presentation may specify to whom notice of dishonor should be sent and what means of telecommunication should be used to transmit the notice. UCC Revised b 2 transfer and d assignment of proceeds. Whether an issuer that takes more than three business days but less than seven business days has acted within a reasonable time will depend upon the circumstances, but will not depend upon whether the beneficiary has an imminent deadline to re-present Rule 5.
Applicants may request that issuers undertake some responsibility in this regard, but absent special fee arrangements or unusual circumstances, issuers may be reluctant to do more than confirm that they will act honestly.
See also current UCC Article 9 on isp998 transactions and proposed UCC Revised Article 9 specifying where assignment may be made despite contractual provision prohibiting isp988.
Thus, each presented document need only comply with the requirements provided in the letter of credit for such document.