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How many days does a bank get to examine documents under a letter of credit?

After documents under a letter of credit are submitted in the counters of a bank, the bank has a strict timeline to determine whether the documents are complying or not. This is called the 'Standard for Examination of Documents' which is defined in Article 14 of UCP 600.

Let's understand what Article 14 says about the time period available to a bank -

Article 14 says -

"A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of five banking days following the day of presentation to determine if a presentation is complying. This period is not curtailed or otherwise affected by the occurrence on or after the date of presentation of any expiry date or last day for presentation."

Let's elaborate with an example -

Suppose the documents under a LC is submitted to the bank on a Monday. The day of presentation of the documents is Day 0. According to Article 14, the bank will get till Day 5 to check the documents. Keep in mind, these days are banking days, meaning only those days will be counted when the bank is open for business. 

Now, suppose the letter of credit expires on Day 4, Friday. Does that imply that the bank have to determine the compliance of the documents on or before Friday? No. According to Article 14 of UCP 600, the period of 5 banking days will not get curtailed even if the LC expires sometime within this time period. 

After Day 4, Friday, Saturday and Sunday are non-banking days. Hence these two days will not be taken in account. Thus, Monday will be the Day 5 and thus by Monday, end of day, the bank has time to check the compliance of the documents submitted.

This rule applies to each bank which is required to examine the documents during the lifecycle of the LC transaction, namely, the issuing bank, the confirming bank and the nominated bank.

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