A more thorough explanation:

The Uniform Customs and Practice for Commercial Documentary Credits (UCP) is a set of rules created by the International Chamber of Commerce that outlines the common practices and procedures used by bankers and merchants when dealing with letters of credit.

Letters of credit are financial instruments used in international trade to ensure that payment is made between the buyer and seller. The UCP helps to standardize the process of using letters of credit, making it easier for businesses to engage in international trade.

Courts often refer to the UCP when interpreting credit law, such as UCC Article 5. This is because the UCP codifies widespread customs and practices that are recognized and followed by the international business community.

For example, if a company in the United States wants to purchase goods from a company in China, they may use a letter of credit to ensure that payment is made once the goods are delivered. The UCP provides guidelines for how this process should be carried out, including the required documentation and the responsibilities of each party involved.

Another example is when a company in Europe wants to import goods from a company in South America. The UCP provides a framework for how the letter of credit should be structured, including the terms and conditions that must be met before payment can be made.

In both of these examples, the UCP helps to ensure that the process of using letters of credit is standardized and consistent, making it easier for businesses to engage in international trade.