New Rules on Letters of Credit- UCP 600

The new ICC uniform customs and practice for documentary credits (UCP Banking Commission's hard working efforts within three years) was approved by the commission in 2006, and came into force worldwide from July 1, 2007.Since the method of payment for goods and services under an international contract by LC plays an important role at present, it is crucial to know the effects of the new rules in shaping relationship between contracting parties in transaction of a letter of credit. In that respect, understanding the rules and its differences with the previous one (UCP 500) by banks and traders would lead to a better and more efficient relationship between parties.In this article it is tried to asses those distinctions (forms and substance) between two rules by a comparative study between them; Firstly, by pointing out rights and duties of parties under LC contract; Secondly, by increasing their knowledge about the rules preventing international legal disputes between them.For such purposes, after an introduction, in section one, those issues generally relevant to LC like definition, principles applied and rules and regulation related to LC are studied. In section two, changes of the new rules are considered in comparison with previous rules, and subjects that are needed to be revised in the next revision of the rules, are noticed. Finally, in the section of conclusion, relevant tables and references are put forwarded.