Why Banks Examine Letter of Credit Documents Rather Than Goods
Why UCP 600 Article 5 means banks pay against documents only, and what that means for buyer and seller.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
UCP 600 Article 5 states that banks deal with documents and not with the goods, services or performance to which the documents relate. Banks examine documents on their face (Art. 14(a)); they do not inspect cargo. This makes Letters of Credit fast and predictable, but means document accuracy decides payment.
| Rule | UCP 600 Art. 5, Art. 14(a) |
|---|---|
| Banks check | Documents on their face |
| Goods disputes | Handled under the sales contract |
Consequences for exporters
- Perfect goods + wrong documents = refusal risk.
- Correct documents = payment, even if the buyer disputes quality.
Consequences for importers
- Protect quality through inspection certificates in 46A.
- Fraud exception is narrow and depends on local law.
Sources
General guidance, not legal advice. Your bank examines documents independently.
Related guides
Reduce avoidable LC document issues
Free snapshot in under a minute. No account needed.
Upload your Letter of Credit
PDF · up to 25 MB