Draft LC Checklist
Two tools in one: a 27-point structured draft-LC review across 9 risk categories, and a parametric auto validator that flags discrepancies from Incoterm, date and tenor inputs.
Walk your draft LC through 9 risk categories. Paste an MT700 to auto pre-check items. Progress and notes save locally.
Why this matters | Legal-name mismatches are the fastest way to a discrepancy. UCP 600 Art. 14(d)–(j) treats data across documents as inconsistent if names or addresses do not match the credit.
Why this matters | UCP 600 Art. 30 governs amount/quantity tolerances. Missing ‘about’ language or wrong currency wording is a common cause of rejected drawings on bulk cargo.
Why this matters | UCP 600 Art. 14(c) defaults presentation to 21 days after shipment if the credit is silent. Tight expiry vs shipment is the single largest source of avoidable rejections.
Why this matters | UCP 600 Art. 31(a) allows partial shipment and Art. 20(c) allows transhipment for containerised cargo unless expressly prohibited. Silence is a decision | make sure it matches your shipping plan.
Why this matters | Field 46A is the highest-risk field in the entire credit. Every required document must be obtainable in the wording specified | carriers, insurers and chambers will not deviate from their standard forms.
Why this matters | Under CIF and CIP the seller must insure. If the LC requires an insurance certificate but the Incoterm places insurance on the buyer, you have a discrepancy waiting to happen (UCP 600 Art. 28; Incoterms 2020).
Why this matters | UCP 600 Art. 18(c) requires the invoice description to correspond with the credit description. Overloading Field 45A with detail the packing list or B/L cannot reproduce guarantees a discrepancy.
Why this matters | Field 40E should reference the governing rules explicitly. For SBLCs, choose UCP 600 for documentary mechanics or ISP98 for pure financial standbys. Silent confirmation status is the most common commercial LC oversight.
Why this matters | UCP 600 Art. 14(h) requires banks to disregard non-documentary conditions. Leaving them in creates ambiguity and delayed drawings even though they are legally unenforceable.
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What is a Letter of Credit (LC) checklist?
Numerical Example: Critical Tenor Discrepancy
In this scenario, the LC expires before the presentation period ends (counting from the latest shipment date), making it impossible to present documents if shipment occurs late in the window.
UCP 600 Article Compliance
Compliance with UCP 600 (Uniform Customs and Practice for Documentary Credits) is the bedrock of trade finance. Most discrepancies arise not from the inability to ship, but from clerical errors in document descriptions or miscalculations of date tenors. A structured review using ISBP 821 (International Standard Banking Practice) ensures that your presentation will be honored by the issuing bank.
| Risk Category | What to Check | Governing Rule |
|---|---|---|
| Parties | Applicant, beneficiary and bank names match the sales contract exactly | UCP 600 Art. 2 |
| Amount & Tolerance | Currency, value and any stated "about" or quantity tolerance | UCP 600 Art. 30 |
| Dates & Tenor | Latest shipment date, expiry date and presentation period are consistent | UCP 600 Art. 6, 14(c) |
| Partial Shipment / Transhipment | Explicitly allowed or prohibited, matching the shipping plan | UCP 600 Art. 31 |
| Documents Required | Document list and description of goods matches the invoice and B/L | UCP 600 Art. 14, 18 |
| Incoterm Alignment | Insurance and freight requirements match the stated Incoterms 2020 rule | Incoterms 2020; UCP 600 Art. 28 |
| Non-Documentary Conditions | Conditions that do not specify a document are disregarded but should be converted | UCP 600 Art. 14(h) |
Related tools: Amendment Cost, MT700 Extractor.
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Frequently asked questions
What is UCP 600?
UCP 600 (Uniform Customs and Practice for Documentary Credits) is the ICC's set of 39 articles governing Letter of Credit practice. It defines how banks handle LC payments, what documents are acceptable, and what constitutes a discrepancy. All LCs are subject to UCP 600 unless stated otherwise.
What is a discrepancy in an LC?
A discrepancy occurs when a document presented by the exporter does not match the LC terms or contains conflicting information. Examples: B/L shipped on the 20th but LC 'latest shipment' is the 15th; invoice description doesn't match LC description. Banks can refuse payment for discrepancies.
How do I avoid discrepancies?
Read the LC carefully before preparing documents. Ensure all documents align: invoice description = LC description = B/L description = packing list description. Check dates (shipment, invoice, inspection) against LC limits. Run this checklist before sending docs to the bank.