Many trade finance bankers ¡ª particularly from Europe ¡ª are of the opinion that there is no need for the retention of negotiation as an option for documentary credits in the next revision of the UCP (Uniform Customs and Practice for Documentary Credits). They argue that the whole concept of negotiation in the UCP is very vague and widely misunderstood in practice. Many of them also say that there is virtually no need for negotiation and no real advantages to keeping it in the next revision of the UCP. I partially agree with the first argument but I do not think that the whole concept of negotiation is completely redundant and without value.

In this article I am trying to discuss the value of negotiation within the UCP 600 context. I feel that the most suitable way to tackle the issue might be to compare credits available by negotiation to credits available by payment，deferred payment and by acceptance. The aim is to discuss the advantages and disadvantages of negotiation (that is documentary credit available by negotiation)，provided that the credit is available with the nominated bank (which can also be the confirming bank) and complying documents are presented.

UCP 600 and Negotiation

In article 2 of the UCP 600 negotiation is defined as follows: