Article 20, URDG 758

Upon presentation to a guarantor, it is important that we know how long the guarantor may take to examine the presentation and then pay or reject the demand. Similarly, prior to UCP 500 provided that the time limit for checking a presentation under a letter of credit should be a reasonable time not exceeding seven banking days. The concept of a ‘reasonable time’ created problems over the actual time allowed. However, a new approach was adopted in UCP 600 so the nominated bank and the issuing bank were each allowed five banking days to check the documents.

Time for examination of demand and payment

A. If a presentation of a demand does not indicate that it is to be completed later, the guarantor shall, within five business days following the day of presentation, examine that demand and determine if it is a complying demand. This period is not shortened or otherwise affected by the expiry of the guarantee on or after the date of presentation. However, if the presentation indicates that it is to be completed later, it need not be examined until it is completed.

"A guarantor must, within five business days following the date of presentation, examine the demand and determine if it is a complying demand."

A presentation is complete when it does not indicate that to be completed later, in case a presentation states the same, then an examiner will treat the date of receipt of the presentation when it completed. The period of five business days will not start to run until the day after presentation to the bank. If the presentation indicates that it is to be completed later, the period of examination will commence the day after the presentation is completed. If the guarantee expiry date occurs between the date of the initial incomplete presentation and the date of the completion of the presentation, the full presentation will be out of time and should be rejected.

A business day is defined in article 2 as ‘a day on which the place of business where an act of a kind subject to these rules is to be performed is regularly open for the performance of such an act’. Usually a guarantee is opened by a bank in that case if that particular bank is opened to perform guarantee related act then it is a business days. Because a guarantee can be opened by a corporate or an entity as well so the terms “business days” has been used instead of banking days.

B. When the guarantor determines that a demand is complying, it shall pay. 

A guarantee is documentary in nature. If the guarantor determines that the demand is a complying demand, he must pay.

C. Payment is to be made at the branch or office of the guarantor or counter guarantor that issued the guarantee or counter-guarantee or such other place as may be indicated in that guarantee or counter-guarantee ("place for payment").

Payment must be made at the place indicated in the guarantee. In case if no place for payment is indicated, then it must be paid at the branch or office of the guarantor that issued the guarantee. The guarantor is not obliged to pay at any other place, even in the case of force majeure preventing payment at the particular place for payment.