Under the Uniform Customs and Practices for Documentary Credits (UCP), a bank issuing a letter of credit shall “have a reasonable time, not to exceed seven banking days” to respond to a presentation of payment documents.
Question: If a bank responds within seven days, is its conduct necessarily “reasonable” under the UCP?
Answer: No, at least according to the Court of Appeal in Los Angeles in DBJJJ, Inc. v. National City Bank, 04 C.D.O.S. 9605 (October 26, 2004). “We hold that seven banking days, the maximum time permitted, is not automatically reasonable…”
The Court also held that “[w]here a bank fails to timely examine documents and provide notice, it is precluded from arguing that the documentary presentation is non conforming.”