1 The mode of payment varies according to the type of credit in question. It may be a cash payment (under a sight credit), the incurring of a deferred payment obligation (deferred payment credit), or acceptance of a conforming bill of exchange accompanying the documents tendered (acceptance credit): see generally Article 2, UCP 600.
2 I.e. if the credit is available by negotiation and with the party to whom the documents are tendered. For detailed analysis of what constitutes negotiation, see E. Adodo, ‘Establishing Negotiation in Letter of Credit Transactions’  SJLS 619. Naturally, that article contains criticism of Article 2 of the UCP 600 definition of negotiation as the ‘purchase by a nominated bank of drafts and/or documents under a complying presentation by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank’.
3 ‘Presentation’ varies according to context and means either the act of presenting documents for examination for honour or negotiation or the documents so delivered: see Art 2, UCP 600; Rule 1.09, International Standby Practices (ISP98). See also UCP 600 Drafting Group, Commentary on UCP 600: Article-by-Article Analysis (Paris: International Chamber of Commerce, 2007) (ICC Publication No. 680), 23.
5 Under Art 14 (a), UCP 600, a presentee issuing or confirming bank is obliged to examine a presentation made to it. However, see GP Selvam J.’s dictum in Amixco Asia (Pte) Ltd v Bank Bumiputra Malaysia Bhd  SGHC 121,  2 S.L.R. 943, para 12 to the effect that the bank is under no obligation to examine documents not duly made. But this does not mean it can simply ignore the documents in its in tray. On the contrary, it has to communicate its rejection of them to the presenting beneficiary or nominated bank: the point is analysed fully in Ch 9.
7 I.e. a presenting beneficiary vis-à-vis a presentee issuing or nominated bank.
8 I.e. a presenting nominated bank vis-à-vis a presentee issuing bank.
9 E.g. EP Ellinger, ‘The Uniform Customs and Practice for Documentary Credits (UCP): their Development and the Current Revisions’  LMCLQ 152, 161–162.
10 Annual LC Survey and training programmes organized by the Institute of International Banking Law and Practice (IIBLP) in Hong Kong, Singapore, and in the Americas. For the relevant dates of the various events, see the web site of the institute at <http://www.iiblp.org> (last accessed on 31 October 2013).
11 See e.g. ND George, ‘Loss of Documents and UCP 600 Article 35’  Annual Survey of Letter of Credit Law & Practice, 169.
12 Occidental Fire & Casualty Co of North Carolina v Continental Bank, 725 F Supp 383 (ND Ill 1989), aff’d 918 F 2d 1312, 1314–1315 (7th Cir 1990).
13 Occidental Fire & Casualty Co of North Carolina v Continental Bank, 725 F Supp 383 (ND Ill 1989), aff’d 918 F 2d 1312, 1314–1315 (7th Cir 1990).
14 See generally the House of Lords decisions in National Bank of Greece and Athens SA v Metliss  AC 509; Adams v National Bank of Greece SA  AC 257.
15 See Squyres v Federal Deposit Insurance Corporation, as receiver for MBank Dallas, 1992 WL 167487, *3-4 (ND Tex); Kelley v First Westroads Bank, 840 F 2d 554, 559–560 (8th Cir 1988); Pastor v National Republic Bank of Chicago, 76 Ill 2d 139 (Ill 1979); Federal Deposit Insurance Co v Bank of Boulder, 911 F 2d 1466 (10th Cir 1990). Concerning the rights of the successor of a beneficiary, see section 5-113, UCC Revised Article 5. Reference may also be made to the official comment accompanying section 5-113.
16 It is generally known and hereinafter referred to as a ‘nominated bank’. Under Article 2, UCP 600, a ‘nominated bank is defined as the bank with which the credit is available or any bank in the case of a credit available with any bank’. By that definition, an issuing bank is also a nominated bank. But the better view is that an issuing bank is a nominating bank.
17 Per Robert Goff L.J. delivering the Court of Appeal decision in European Asian Bank AG v Punjab & Sind Bank (No. 2)  1 WLR 642, 655–656, explaining Ireland v Livingston (1872) LR 5 HL 395, 416, per Lord Chelmsford, Devlin J.’s dictum in Midland Bank Ltd v Seymour  2 Lloyd’s Rep 147, 153, and Lord Diplock’s statement of the applicable general principle of construction of ambiguous or unclear terms in letters of credit in the Privy Council case of Commercial Banking Co of Sydney v Jalsard Pty  AC 279, 286.
18 Credit Agricole Indosuez v Muslim Commercial Bank Ltd  1 All ER (Comm) 172,  1 Lloyd’s Rep 275 (CA).
19 The claimant negotiating bank succeeded on this ground against the issuing bank in European Asian Bank v Punjab & Sind Bank (No. 2)  1 WLR 642.
20 If the issuer is held able to do so, the negotiating Sarawak bank instanced is a mere assignee of the amount on the credit and takes subject to equities existing between the issuer and the beneficiary at the time of the assignment: Banco Santander SA v Bayern Ltd  1 All ER (Comm) 775,  Lloyd’s Rep Bank 165, aff’g Langley J.’s decision  2 All ER (Comm) 18,  Lloyd’s Rep Bank 239. cf. section 5-109 (a) (1) (iv), Uniform Commercial Code Revised Article 5, which lays down that the assignee is not affected by such equities, insofar as it acted bona fide in becoming an assignee.
21 Gary Collyer and Ron Katz (eds), ICC Banking Commission: Collected Opinions 1995-2001 (ICC Publication No. 632), R 387, esp at 48 (response to the query ‘Whether branches of a bank in the same country are considered to be the same bank’).
22 This point is discussed in ch. 5, section C.
23 Squyres v Federal Deposit Insurance Corporation, as receiver for MBank Dallas, 1992 WL 167487, *7 and fn 21 (ND Tex).
24 2009 WL 3270276 (WD Mich Oct 5, 2009); 70 UCC Rep Serv 2d 177 (2009).
25 Under paragraph 6, Official Comment 2 to section 5-108, Uniform Commercial Code Revised Article 5 as adopted by the state of Michigan, ‘Documents are considered to be received only when they are received at the place specified for presentation by the issuer or other party to whom presentation is made’. See also Ali Malek and David Quest, Jack: Documentary Credit, 4th edn (Haywards Heath, West Sussex: Tottel, 2009), 5–25.
26 The provisions of Article 9, UCP 500 are substantially reproduced in Article 10 of the UCP 600.
27 Emphasis supplied. The clause evidently goes further than Article 9 (i) of the UCP 500 incorporated by reference into the credit. The sub-article, reproduced under Article 10 (a), UCP 600, provides in relevant part that a credit can neither be amended nor cancelled without the agreement of the parties to it.
28 However, under Michigan common law principles, a ‘party who seeks to prove that a written agreement prohibiting oral modifications was nonetheless orally modified must prove by clear and convincing evidence that the parties mutually intended to modify the particular original contract’: see Quality Products & Concepts Co v Nagel Precision Inc, 469 Mich 362 (2003).
29 Rochester Midland Corp v Enerco Corp, 2009 WL 1561817, *6 (WD Mich); accord Spero Elec Corp v IBEW, 439 F 3d 324–329 (6th Cir 2006); Chartbrook Ltd v Persimmon Homes Ltd  UKHL 38,  1 AC 1101, para 20.
30 Pursuant to Uniform Commercial Code, section 1-203, every contract imposes an obligation of good faith and fair dealing in its performance. But see section 5-102 (7), Revised Article 5 which defines good faith as honesty in conduct.
31 The authorities, if any are needed, include Hughes v Metropolitan Ry Co (1877) 2 App Cas 439, 448 per Lord Cairns; Birmingham and District Land Co v London & North Western Ry Co (1888) 40 Ch D 268, 286 per Bowen L.J.; Waltons Stores (Interstate) Ltd v Maher (1987-1988) 164 CLR 387; Legione v Hateley (1982-1983) 152 CLR 406, 421, 437; Thompson v Palmer (1933) 49 CLR 507, 547; Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641, 674–676 (all the preceding five cases are decisions of the High Court of Australia).
32 See generally Combe v Combe  2 KB 215; Central London Property Trust Ltd v High Trees House Ltd  1 KB 130, 134; HG Beale with specialist editors, Chitty on Contracts, vol 1, 30th edn (London: Sweet & Maxwell, 2008), para 3-096.
33 A person aware of limitations on actual authority is usually entitled to assert that he relied on the authority subject to those limitations: see Trifinery v Banque Paribas, 762 F Supp 1119, 1123 (SDNY 1991); Marino Industries Corp v Chase Manhattan Bank NA, 686 F 2d 112, 117 (2nd Cir 1982).
34 The letter of credit stated that it was subject to the then prevailing UCP 500. One of the most startling features of the Chemical Bank case is the judge’s acceptance of the submission by counsel for both sides that UCP 600 applied to the credit because it is the version currently in force.
35 The corresponding clause in the UCP 500 is Article 14 (d) (i), UCP 500, which at all events the judge should have applied.
36 The wider aspects of a presentee bank’s duty to notify its rejection of a presentation to a presenting party and the operation of the preclusion rule are covered in ch. 9.
38 In respect of fraud and nullity exceptions to the autonomy principle, see K Donnelly, ‘Nullity for Nothing: A Nullity Exception in Letters of Credit?’  JBL 316; Richard Hooley, ‘Fraud and Letters of Credit: Is there a Nullity Exception?’  CLJ 279.
39 Second sentence of the sub-article provides that a ‘credit available with a nominated bank is also available with the issuing bank’.
40 The first and second sentences of the sub-article respectively articulate: ‘The place of the bank with which [a] credit is available is the place for presentation ... A place for presentation other than that of the issuing bank is in addition to the place of the issuing bank’. (Emphasis added.)
41 That view is in substance supported by some leading LC specialists and commentators, including EP Ellinger, ‘The Uniform Customs and Practice for Documentary Credits (UCP): their Development and the Current Revisions’  LMCLQ 152, 161 (noting that under the clause, where a credit is available with a bank other than the issuing bank, the beneficiary has the option of treating it as available with the issuer). The old Art 10 (b) (i), UCP 500 provided that the ‘Presentation of documents must be made to the Issuing Bank or the Confirming Bank, if any, or any other Nominated Bank’. But this sub-article was not thought to have the effect of providing the beneficiary a choice between forwarding the documents to the issuing bank or to the nominated bank: Raymond Jack, Ali Malek and David Quest, Documentary Credits, 3rd edn (Butterworths: London, 2001), para 6-10.
42 Bernard Wheble (ed), Opinions of the ICC Banking Commission: On Queries Relating to Uniform Customs and Practice for Documentary Credits (UCP) 1987—1988, (ICC Publication No. 469), R 150. See also ICC Banking Commission Position Paper No. 2. As made clear in the introduction to the UCP 600, that Paper is inapplicable under the current regime. In substance, however, it forms the prevailing provisions of Art 6 (a) and (d) (ii).
43 Aldabe Fermin v Standard Chartered Bank  SGHC 119, para 106 per Steven Chong J.C.; Kumagai-Zenecon Construction Pte Ltd v Arab Bank plc  3 SGCA 41,  3 SLR 770, aff’g  2 SGHC 31,  2 SLR 805, paras 23–26. It was there held that express clauses in a standby letter of credit overrode the incorporated, but conflicting provision of Article 13 (a) of the UCP 500: see Ch 9, section D. See also Korea Exchange Bank v Standard Chartered Bank  SGHC 220,  1 SLR 565.
44  SGHC 26,  3 SLR 288 (HC, Singapore).
45 However, it was established in evidence (see Kredietbank NV v Sinotani Pacific Pte Ltd  SGHC 26,  3 SLR 288 (HC, Singapore), at paras 55, 63, and 64 of the court’s judgment) that the issuing bank had waived the non-conformity by conduct (by accepting the presentation notwithstanding the irregularity). And as Tindal C.J. said in Alexander v Gardner (1835) 1 Bing. (N.C.) 671, 677: ‘If [a] party waives a condition he is in the same situation as if it had never existed’. Furthermore, in order to constitute a waiver there must be conduct by a contracting person which leads the other party reasonably to believe that he will not stand on his strict legal rights as to the performance of the contract: Charles Rickards Ltd v Oppenhaim  1 KB 616, 626, per Denning L.J.
46 Amixco Asia (Pte) Ltd v Bank Bumiputra Malaysia Bhd  2 SLR 943, 947, 955–956 (HC, Singapore).
47 Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran  1 Lloyd’s Rep 36. The actual decision of the Court of Appeal delivered by Sir Christopher Staughton was (at 39) that ‘the bank must first decide whether telecommunication of the notice to the presenter without delay is possible, and if not must choose some other expeditious means’, but that no such notice is needed to be given if a senior official of the presenter, under whose aegis the documents were tendered, is present at the bank to receive the notice.
49 1985 WL 674781 (SC),  HKEC 125.
50 1985 WL 674781 (SC),  HKEC 125, at 36 of the judgment reported in Westlaw. The facts in the Mercantile Bank case may be contrasted with those of European Asian Bank AG v Punjab & Sind Bank (No. 2)  1 WLR 642. In this case, the stipulated documents were required under the credit to be tendered to the defendant issuing bank in New Delhi via airmail. But the negotiating bank in Singapore presented them through an employee of the beneficiary of the credit as a messenger pursuant to an arrangement between the negotiating bank and the beneficiary. Nothing turned on this point, however, because the issuing bank had advised the negotiating bank of acceptance of the documents and thus waived the non-compliance. As between the issuing bank and its customer, the latter received the documents and accepted the accompanying draft. It is important to note that such acceptance standing alone would not deprive him of the right to deny liability to the issuing bank if he later discovered that the documents had not been sent in compliance with the credit.
51 G. Jaris & Co v Banque D’Athenes, 246 Mass 546, 576 (1923); Barde Steel Products Corporation v Franklin National Bank, 281 F 814 (1922); Anglo-South American Trust Co v Uhe, 261 NY 150 (1933); Liberty National Bank & Trust Co of Oklahoma City v Bank of America National Trust & Savings Association, 218 F 2d 831 (10th Cir 1955), aff’g 116 F Supp 233, 243–244 (WD Ok 1953); Cypress Bank v Southwestern Bell Telephone Co, 610 SW 2d 185, 187 (Tex Civ App 1980); Siderius v Wallace, 583 SW 2d 852, 860 (Tex Civ App 1979).
52 Art 6 (d) (i), UCP 600.
53 For example, riots, civil commotion, insurrections, wars, acts of terrorism, any strikes or lockouts, or other causes beyond the bank’s control: Art 36, UCP 600. If the credit has expired during such events, the bank’s undertaking ceases as well.
54 Bayerische Vereinsbank v National Bank of Pakistan  1 Lloyd’s Rep 59. In that case, the letter of credit, made subject to the UCP 500, was to expire on 30 July 1994, which turned out to be a Saturday. As it was not in the habit of the nominated bank to open for business on Saturday or Sunday, it was common ground that by virtue of Art 44 (a) (the equivalent of Art 29 (a), UCP 600) the credit was automatically extended to Monday 1 August 1994, being the first banking day following 30 July. Similarly, in Morgan Guaranty Trust Co of New York v Vend Technologies, Inc, 100 AD 2d 782 (1984), the credit which incorporated UCP 290 specified an expiry date of 1 January 1983, a Saturday and legal holiday, including Monday 2 January 1984. The New York Appellate Division held that pursuant to Art 39 (a) (equivalent of Art 44 (a), UCP 500; Art 29 (a), UCP 600), the plaintiff nominated bank would be within its rights if it honoured the beneficiary’s presentation on 3 January, being the first following banking day.
55 See the last sentence under Art 31(b), UCP 600.
56 Second sentence of Art 44 (b), UCP 500. Curiously, the provision is not found in the current UCP regime, but of course the omission does not alter the law.
57 cf. Art 29 (b), UCP 600.
58 UCP 600 Drafting Group, Commentary on UCP 600: Article-by-Article (ICC Publication No. 680) (2007) at 136.
59 Bayerische Vereinsbank v National Bank of Pakistan  1 Lloyd’s Rep 59 at 66, per Mance J.; Morgan Guaranty Trust Co of New York, 100 A.D.2d 782, 783 (1984) per Allen Murray Myers J., with the concurrence of Sullivan J.P., Carro, Bloom, Milonas, and Kassal JJ.
60 Art 33, UCP 600. Semble, the issuing bank or a confirming bank may decline to accept a presentation that it knows was honoured by a nominated bank outside of the nominated bank’s usual banking hours.
61 97 P 3d 505 (Kan App 2004).
62 The other members of the court were Pierron and Marone JJ.
63 This problem would not have arisen if, for example, the credit had stated that: ‘Presentation of the specified documents must be made not later than 5 p.m., June 26, 2002, at which date and time this letter of credit expires’. Green P.J. in the course of his judgment also made suggestions along this line: see Carter, at para 6.
64 The UCP 600 Drafting Group: Commentary on UCP 600: Article-by-Article Analysis (ICC Publication No. 680, 2007) at 143; Gary Collyer and Ron Katz, ICC Banking Commission Opinions 2005-2008 (ICC Publication No. 697, 2008) at 45.
65 ICC Banking Commission Opinions 2005-2008, (ICC Publication No. 697, 2008) at 45; ICC Banking Commission Collected Opinions 1995-2001 (ICC Publication No. 632), R 265, 134–135.
66 Voest-Alpine International Corp v Chase Manhattan Bank, 707 F 2d 680, 685 (2d Cir 1983).
67 218 F 2d 831 (10th Cir 1955).
69 Unless it is precluded from doing so at common law, as opposed to the preclusion rule under Art 16 of the UCP 600, which is inapplicable where non-compliance with a stated deadline is asserted. These points are discussed in Ch 11.
71  SGHC, , para 48.
72  SGHC, , para 32.
73 The substance of the clause is now contained in Art 7 (c), UCP 600.
74 Such a reason may include estoppel. But it should be noted that the preclusion provisions under Art 16, UCP 600 are inapplicable in this type of case. This is indicated in the introductory section of this article. However, reference may be made to the decision of GP Selvam J.C. in Amixco Asia (Pte) Ltd v Bank Bumiputra Malaysia Bhd  2 SLR 943, 954 (High Court, Singapore).
75 The issue of what constitutes an acceptable bill of lading and the other specified types of transport documents is discussed in ch. 7.
76 The only change being the specific mention of original transport document, as opposed to transport document.
77 In turn largely reproduced Art 47(a), UCP 400, and provided: ‘In addition to stipulating an expiry date for presentation of documents, every credit which calls for a transport document(s) should also stipulate a specified period of time after the date of shipment during which presentation must be made in compliance with the terms and conditions of the Credit. If no such period of time is stipulated, banks will not accept documents presented to them later than 21 days after the date of shipment’.
78  3 SLR 371(High Court, Singapore); rev’d in part  2 SLR 121(CA).
79  3 SLR 371, 376, 377.
80  2 SLR 121, 127.
81  2 SLR 121, 127, at 128 (emphasis added).
82 Charles del Busto (ed), Documentary Credits: UCP 500 & 400 Compared (ICC Publication No. 511), 112 (emphasis added).
83 250 F 3d 319 (5th Cir 2001).
84 250 F 3d 319 (5th Cir 2001), 326–327 (emphasis added). As it turned out, the court held that the issuing bank had waived its right to avail itself of the breach to justify its rejection of the documents.
85 Section B of this chapter.
86 Consolidated Aluminium Corp v Bank of Virginia, 704 F 2d 136 (4th Cir 1983), aff’g 544 F Supp 386 (DC Md 1982).
87 In respect of the beneficiary’s relations with his bank, the law relating to collection, including the ICC Uniform Rules for Collections (ICC Publication No. 522), will apply.
88 A related position in respect of the advising bank is discussed at length in Ch 3. However, see the authoritative statement of the general principles in Royal Product Ltd v Midland Bank Ltd  2 Lloyd’s Rep 194, 198; Calico Printers’ Association v Barclays Bank Ltd (1930) 36 Com Cas 71, aff’d (1931) 39 Ll L Rep 51; Prince v Oriental Bank Corp (1878) 3 App Cas 325; Mackersy v Ramsays Bonars & Co (1843) 9 Cl & F 818, 8 ER 628; AA Valibhoy & Sons v Banque Nationale de Paris  SGHC 98,  2 SLR 772; AA Valibhoy & Sons v Habib Bank Ltd [1982-1983] SLR 379.
89 This proposition finds support in AA Valibhoy & Sons v Banque Nationale de Paris  SGHC 98,  2 SLR 772; AA Valibhoy & Sons v Habib Bank Ltd [1982-1983] SLR 379; Calico Printers’ Association v Barclays Bank Ltd (1930) 36 Com Cas 71, aff’d (1931) 39 Ll L Rep. 51.
90 Cap. 396, Laws of Singapore, Rev Ed, 1994; Unfair Contract Terms Act 1977, the UK.
91 Section 11 (1), the UK Unfair Contract Terms Act 1977.
92 Art 2, UCP 600; Arts 2 and 14 (a), UCP 500; Arts 2, 10 and 16 (a), UCP 400; General Provisions (b) and Art 3, UCP 290; General Provisions (b) and Art 3, UCP 222 (1962 Revision); Art 5, ICC Brochure No. 151 (1951 Revision); Art 9, ICC Brochure No. 82 (1933).
93 Art 17, UCP 600; Art 20 (b) and (c), UCP 500; Art 22 (c), UCP 400.
94  SGHC 121,  2 SLR(R) 65, para 12.