scholarly journals The Fraud Exception to Standby Letters of Credit in Australia: Does it Embrace Statutory Unconscionability?

1999 ◽  
Author(s):  
Jeffrey J Browne
Keyword(s):  
Fraud Exception ◽  
Letters Of Credit

scholarly journals THE TWO IMPORTANT DOCTRINES UNDERLYING DOCUMENTARY LETTERS OF CREDIT AND THE FRAUD EXCEPTION

2008 ◽  
Author(s):  
Tenielle Appanna
Keyword(s):  
International Trade ◽  
Letter Of Credit ◽  
Fraud Exception ◽  
Letters Of Credit

Documentary letters of credit are important tools in relation to international trade. The parties who make use of these instruments usually come from different countries and usually have different views on trade and customs. The parties generally do not know each other personally and have opposite interests in relation to the contract of sale. There is a sense of distrust towards each other, as both parties have serious concerns as to the other’s performance in terms of the contract. While the purchaser has a fear of receiving goods of an incorrect quantity or quality, or not receiving goods at all, the seller fears non-payment, or that the buyer refuses to accept the goods on a mere technicality. Coupled with the abovementioned is the fact that legal recourse will be expensive and may be complex taking jurisdiction into consideration. A documentary letter of credit eases some of these fears due to the unique doctrines which form the foundation of this instrument, and these will be discussed at length. The most frequently encountered exception to documentary letters of credit not being fulfilled is that of fraud, which will also be discussed at length.

Fraud in the documents and the underlying contract in letters of credit under Jordanian and English law: a new prerequisite?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kamal Jamal Alawamleh ◽  
Shadi Helo Abu Helo
Keyword(s):  
Design Methodology ◽  
Secondary Data ◽  
Specific Area ◽  
Main Method ◽  
Content Type ◽  
Letter Of Credit ◽  
Important Principle ◽  
English Law ◽  
Fraud Exception ◽  
Letters Of Credit

Purpose This study aims to examine the application of the fraud exception to the autonomy principle that governs the work of letters of credit in both Jordanian and English law. While it has been reiterated that the application of such exception before the English courts is difficult, this study highlights and critically analyzes some of the reasons that lie behind such a difficulty. Moreover, this study compares the English approach with the Jordanian approach to this specific area of law to find out what each can benefit from the approach of the other. The extent to which both approaches have been successful in applying such an exception will be examined thoroughly in this paper. Design/methodology/approach To examine how effective is the approaches followed by the English and Jordanian Courts in applying the fraud exception in this context, this work makes use of the secondary data available in this regard as the main method to complete such an examination. By critically analyzing and comparing the various data contained in these sources, this work identifies the problems associated with such approaches. Findings This work suggests that while the autonomy principle in letters of credit has what shall maintain its role as an important principle, the fraud exception application shall be facilitated. It further submits that the English Courts attitude to this specific area of law is somehow ambiguous and intertwined as it does not distinguish between two different stages that are existent in this context, namely, the submission of the documents stage “the prerequisite” that in case of submitting genuine, truthful and complying documents would activate the autonomy principle and the following stage which starts after activating the autonomy principle and which to it a fraud exception can be applied. Originality/value This work proposes that a beneficiary of a letter of credit shall satisfy a prerequisite before it can be said that he is protected under the autonomy principle. Such a prerequisite dictates that he shall submit genuine, truthful and complying documents to activate the autonomy principle and once the beneficiary submits such documents it can be said that the autonomy principle, which fraud is an exception to it, has been activated. Furthermore, this work proposes that English Courts shall adopt an approach similar to the Jordanian approach in relation to the application of the fraud exception, whereas the latter requires proving neither the beneficiary’s fraudulent intent nor his knowledge of it but rather applies a more realistic test concerned merely with the goods’ quality and quantity.

The implementation of the fraud exception rule: a comparative study

2020 ◽  
Vol 27 (3) ◽  
pp. 977-993
Author(s):  
Zaid Aladwan
Keyword(s):  
Comparative Study ◽  
Design Methodology ◽  
Common Law ◽  
Content Type ◽  
The Us ◽  
Legal Thinking ◽  
Fraud Exception ◽  
Letters Of Credit ◽  
The One ◽  
Do So

Purpose The purpose of this paper is to examine the application of the fraud exception rule and try to analyze the different approaches in regard to the implication of fraud rule in letters of credit. Further, this paper tries to explore if there is an obstacle when applying such exception rule in common law and whether there is an overlap with interpreting the said rule. The same fact appears in civil law courts as well. Design/methodology/approach This paper is a comparative study which uses analytical approach and critical legal thinking. Findings The scope of the fraud defence, the US legal systems demonstrate that the scope of the fraud rule is extended and covers both fraud in documents and fraud in the underlying contract, while in contrast, in UK the rule’s scope is restricted to fraud in documents only. Such an approach is reasonable, as it is justified by applying the Uniform Customs and Practice for Documentary Credits (UCP) rules strictly. That is to say, English courts apply the rules literally, even if it does not lead to fair judgements, while in contrast, American courts seek to enforce justice even if it goes beyond the rules. In any case, restricting the fraud exception to fraud in the documents is the proper approach. The reason for such restriction, on the one hand, is to maintain the integrity of letters of credit and, on the other hand, to affirm the autonomy principle. Originality/value Extending the scope of the fraud defence will require banks to go beyond the documents, which is not logical. Banks are neither expert in such transactions nor required to do so. Most importantly, banks are concerned with documents only; it is for the court to go beyond the documents. Although this approach could be criticized, it is important to ensure that the validity of the documentary credit instrument is not compromised. As established by academics, any argument need not engage the bank unless it is in respect of the presented documents. In short, “pay now, argue later” is paramount to distinguish parties’ litigations from banks vs parties’ litigations. In any case, it can be suggested that extending the fraud rule exception to include fraud in the underlying contract from Jordan perspective is not the proper one because it is necessary to maintain the integrity of letters of credit and to affirm the autonomy principle.

scholarly journals The fraud exception in letters of credit – the Chinese approach

2017 ◽  
Vol 2017 (3) ◽  
pp. 13
Author(s):  
Yeming Ding ◽  
Bruno Zeller
Keyword(s):  
Fraud Exception ◽  
Letters Of Credit

scholarly journals The Judicial Approach to Injunctions in Letters of Credit and Performance Bond Transactions: The Fraud Exception Re-examined.

2012 ◽  
Vol 10 (1) ◽  
pp. 35-65
Author(s):  
Ademuni Odeke
Keyword(s):  
Performance Bond ◽  
Fraud Exception ◽  
Letters Of Credit ◽  
And Performance

The Judicial Approach to Injunctions in Letters of Credit and Performance Bond Transactions: The Fraud Exception Re-examined.

scholarly journals Fraud in Letters of Credit under English Law: Issues and Cases (the Three Dimensions)

2021 ◽  
Author(s):  
Zaid Aladwan
Keyword(s):  
Three Dimensions ◽  
Third Party ◽  
Credit System ◽  
The Third ◽  
The Status ◽  
English Law ◽  
Fraud Exception ◽  
Letters Of Credit ◽  
The Third Party ◽  
Evidence Requirement

According to many cases, it has been demonstrated that sellers with bad intentions have manipulated letters of credit system in many ways, including fraud. Thus, many legal jurisdictions have recognized the fraud exception rule. In order to apply such exception, some conditions must be met. Among these conditions, the bank’s knowledge and a requirement of a clear evidence. Notably, the bank’s knowledge is crucial, meaning that the establishment of the sole exception will depend upon the status of the bank’s knowledge. Meaning that if the bank is aware of existing fraud, it is under a duty to refuse presentation. Otherwise, it should not. In turn, the establishment of clear evidence by the English courts is somewhat hard to achieve, consequently, such condition criticized often. Further, if the beneficiary himself commits the fraud, or has knowledge of the fraud, then the fraud exception rule will apply.1 This raises the question of whether the fraud exception should also bite where the fraud is committed by a third party but without the beneficiary’s knowledge. From these facts, this chapter will try to analysis the status of the bank’s knowledge and the hardship related to the clear evidence requirement in conjunction with the third-party fraud.

ZBΒ -Dokumentation. International Standby Practices ISP98

1999 ◽  
Vol 11 (5) ◽  
Keyword(s):  
Chamber Of Commerce ◽  
Letters Of Credit ◽  
International Chamber Of Commerce ◽  
Deutsche Übersetzung

Bei den Standby Letters of Credit handelt es sich um die einer Bankgarantie ähnliche Sonderform des Dokumentenakkreditivs. Die ICC (International Chamber of Commerce) hat mit den International Standby Practices (ISP98) ein eigenständiges Regelwerk für Standby Letters of Credit veröffentlicht und ab dem 1. Januar 1999 zur Verwendung empfohlen. Die ISP98 werden in dem Beitrag von Haas, ZBB 1999, 301 (in diesem Heft) ausführlich dargestellt und auf ihre Verwendbarkeit für den deutschen Rechtskreis untersucht. Nachfolgend ist das Regelwerk in der englischen Originalfassung vollständig abgedruckt. Eine deutsche Ubersetzung liegt nicht vor.

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