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International Standby Practices (ISP98)

International Standby Practices (ISP98)
Table of Contents


General Principles

1.06 Nature of Standbys

a. A standby is an irrevocable, independent, documentary, and binding undertaking when issued and need not so state.

b. Because a standby is irrevocable, an issuer's obligations under a standby cannot be amended or cancelled by the issuer except as provided in the standby or as consented to by the person against whom the amendment or cancellation is asserted.

c. Because a standby is independent, the enforceability of an issuer's obligations under a standby does not depend on:
i. the issuer's right or ability to obtain reimbursement from the applicant;
ii. the beneficiary's right to obtain payment from the applicant;
iii. a reference in the standby to any reimbursement agreement or underlying transaction; or
iv. the issuer's knowledge of performance or breach of any reimbursement agreement or underlying transaction.

d. Because a standby is documentary, an issuer's obligations depend on the presentation of documents and an examination of required documents on their face.

e. Because a standby or amendment is binding when issued, it is enforceable against an issuer whether or not the applicant authorised its issuance, the issuer received a fee, or the beneficiary received or relied on the standby or the amendment.
Referring Principles
A project of CENTRAL, University of Cologne.