1 First adopted in Art 11 of the maiden edition of the UCP in 1933, and constantly reproduced in subsequent editions, the principle is contained in Art 34, UCP 600; its foundation derives from that applicable in the analogous context of the rights of a holder for value of a bill of exchange and accompanying shipping documents which are regular on their face but in fact forgeries: Guaranty Trust Co of New York v Hannay  2 KB 623. See also Baxter v Chapman (1873) 29 LT 642; Leather v Simpson (1871) LR 11 Eq 398; Shepherd v Harrison (1871) LR 5 HL 116; Mirabita v Imperial Ottoman Bank 3 Ex D 164; Springs v Hanover National Bank 209 NY 239, all of which were discussed and applied by the Court of Appeal in Guaranty Trust Co of New York v Hannay  2 KB 623.
2 European Asian Bank A.G. v Punjab & Sind Bank (No. 2)  1 Lloyd’s Rep 611 at 615, 619, per Robert Goff L.J. delivering the judgment of the Court of Appeal.
3 E.g. Lamborn v Lake Shore Banking & Trust Co, 188 NYS 162 at 164 (1921), aff’d by the New York Court of Appeals, 231 N.Y. 616; Bank of Montral v Recknagel, 109 N.Y. 482; National City Bank v Seattle National Bank, 121 Wash 476 (1922); cf. Camp v Corn Exchange National Bank, 285 Pa 337 at 344 (1926). Contra, Ocean Bank of Miami v Law Esquina Presidential Inc., 623 So 2d 520 at 522 (Dist Ct App Fla, 1993): ‘Strict compliance rule applies to letter of credit contracts but not to applicant agreement with the issuing bank’.
4 John F Dolan, ‘A Principled Exception to the Strict Compliance Rule in Trilateral Letter of Credit Transactions’ (2002-2003) 18 Banking & Finance Law Review 245. The position canvassed there was to some extent originally put forward by the same author in his article ‘Letter of Credit Disputes Between Issuer and Customer’ (1989) 105 Banking LJ 380.
5 See the observations expressed by Senior District Judge Cannella in Bank of Cochin Ltd v Manufacturers of Hanover Trust Co, 612 F Supp 1533 at 1537–1540 (SDNY 1985), aff’d 808 F 2d 209 (2nd Cir 1986).
6 Guaranty Trust of New York v Van Den Berghs Ltd. (1925) 22 Ll L Rep 447 at 454–455.
7 Bank of Nova Scotia v Angelica-Whitewear Ltd. (1987) 36 DLR (4th) 161 at 191–192, per Le Dain J.
8 Kwei Tek Chao v British Traders & Shippers Ltd  2 QB 459,  2 WLR 365.
11 Articulated in Art 4 (a) and Art 5, UCP 600; section 5-103 (d), Revised Article 5: ‘Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or non-performance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary’. See also Rules 1.06 and 1.07, ISP98. Early authorities in point include Basse v Bank of Australasia (1904) 90 LTR 618; American Steel Co v Irving National Bank, 266 F 41 at 43–44 (2d Cir 1920); Frey & Son v Sherburne Co, 193 App Div 849 (1920); Lamborn v Lake Shore Banking & Trust Co, 188 NYS 162 (1921); Benecke v Haebler, 38 App Div 344 at 347 (1899); National City Bank v Seattle National Bank, 121 Wash 476 (1922); Banco Nacional Ultramarino v First National Bank of Boston, 289 F 169 (1923); Bank of Italy v Merchants’ National Bank, 236 NY 106 (1923).
13 Art 4 (a), UCP 600; section 5-103 (d), Revised Article 5; Rule 1.07, ISP98.
14 National City Bank v Seattle National Bank, 121 Wash 476 (1922) at 483, emphasizing: ‘We are not here concerned with the original contract between [the beneficiary and applicant], and we need not inquire as to whether the terms of that contract were met ... Bankers are not dealers in sugar in a case as this, but are dealers in documents only, and whatever contract was made by the banks must be determined from the letter of credit itself’.
15 American Steel Co v Irving National Bank, 266 F 41, 43 (1920).
16 Bank of Newport v First National Bank & Trust Co of Bismarck, 687 F 2d 1257 at 1261–62 (8th Cir 1982): ‘[L]etter of credit would lose its commercial vitality if, before honouring drafts, the issuing bank were obliged to look beyond the terms of the letter of credit to the underlying contractual controversy between its customer and the beneficiary’. Missouri Highway and Transportation Commission v Morganstein, 703 SW 2d 894 at 898–899 (Mo 1986); Amwest Surety Ins. Co v Concord Bank, 248 F Supp 2d 867 at 876 (ED Mo 2003).
17 (1927) 27 Ll L Rep 49.
18 (1927) 27 Ll L Rep 49 at 52 (emphasis added).
19 (1922) 13 Ll L Rep 21.
20 (1922) 13 Ll L Rep 21, 24 (emphasis added). See also Donald H Scott & Co Ltd v Barclays Bank Ltd  2 KB 1, 11 (Bankes L.J; Wilson & Co v Belgium Grain Co  2 KB 1, 9.
21 J.H. Rayner & Co Ltd v Hambro’s Bank Ltd  1 KB 37 at 40, per Mackinnon L.J.
22 Gian Singh & Co Ltd v Banque de l’Indochine  2 All E.R. 754 at 759,  2 Lloyd’s Rep 1 at 12, per Lord Diplock in the Privy Council on an appeal from a judgment of the Supreme Court of Singapore.
23 E.g. Voest-Alpine International Corp. v Chase Manhattan Bank, 707 F 2d 680 at 683 (2d Cir 1983); Alaska Textile Co Inc v Lloyd Williams Fashions Inc, 777 F Supp 1139 at 1141 (SDNY 1991), aff’d 982 F 2d 813 (2d Cir 1983); Indian Overseas Bank v United Coconut Oil Mills Inc  SGCA 62,  1 SLR 141, at para 18; Davis O’Brien Lumber Co Ltd v Bank of Montreal  3 DLR 536 at 550, per Bridges J. in the Appeal Division of the New Brunswick Supreme Court.
24 Margaronis Navigation Agency Ltd v Henry W. Peabody & Co of London Ltd  2 QB 430 at 444, per Seller L.J. pointing out that ‘it is a rule of general application’ in the field, regardless of whether it is being invoked by a claimant to prove his claim or merely as a defence to a claim to honour a tender of documents or goods.
25 Moralice (London) Ltd v E.D. & F. Man  2 Lloyd’s Rep 526; cf. Soproma S.p.A. v Marine & Animal By-Products Corp.  1 Lloyd’s Rep 367, where McNair J., who decided Moralice, held ( 1 Lloyd’s Rep 367 at 390) that a variance of 0.5o F between the requisite loading temperature and that stated in the tendered bill of lading, standing alone, was not a material discrepancy.
26 Marino Industries Corp. v Chase Manhattan Bank, 686 F 2d (2nd Cir 1982).
27 Beyene v Irving Trust Co, 762 F 2d 4 (2nd Cir 1985).
28 Hanil Bank v PT Bank Negara Indonesia, 41 UCC Rep Serv 2d 618 (SDNY 2000).
29 Trafigura Beheer B.V. v Kookmin Bank  EWHC 2350 (Comm), per Cooke J.
30 National City Bank v Seattle National Bank, 121 Wash 476 (1922). Reference may also be made to Lamborn v Lake Shore Banking & Trust Co, 188 NYS 162 at 164 (1921) (shipping documents bearing ‘Java white sugar’ instead of ‘Java white granulated sugar’); Banco Nacional Ultramarino v First National Bank of Boston, 289 F 169 (1923) (‘white crystal sugar’ instead of ‘Brazil white crystal sugar’); Filley v Pope, 115 US 213 (bills of lading indicating shipment from ‘Leith’ instead of ‘Glasgow’); Calorie Stove Corp. v Chemical Bank & Trust Co., 205 F 2d 492 (2nd Cir 1953) (‘steel’ instead of ‘cold rolled prime steel sheets’); Bank of Italy v Merchants’ National Bank, 236 NY 106 (1923) (‘raisins’ instead of ‘dried grapes’).
31 Seaconsar v Bank Markazi  1 Lloyd’s Rep 236 at 239. (Sir Christopher Staughton pointed out that this apparent typographical mistake was a discrepancy the examining nominated bank had failed to notice. Nothing turned on this point, however.)
32 Breathless Associates v First Savings & Loan Association, 654 F Supp 832 (ND Tex 1986).
33 American National Bank v Cashman Bros. Marine Contracting, 550 SO 2d 98 (Dist Ct App Fla 1989).
34 For pronouncements on the rule, see e.g., Voest-Alpine International Corp v Chase Manhattan Bank, 707 F 2d 680, 683 (1983): ‘Literal compliance with the credit ... is ... essential so as not to jeopardize the bank’s right to indemnity from its customer’; Venizelos SA v Chase Manhattan Bank, 425 F 2d 461, 465 (1970): ‘Documents and shipping description must be as stated in the letter’; Courtaulds North America Inc v North Carolina National Bank, 528 F 2d 802, 805–6 (1975): ‘[T]he beneficiary must meet the terms of the credit – and precisely’; Philadelphia Gear Corp v Central Bank, 717 F 2d 230, 236 (1983): ‘The documentation necessary to support payment ... must conform exactly to the requirements of the credit’; Banque Paribas v Hamilton Industries International Inc, 767 F 2d 380, 384 (1985): ‘Issuing bank is entitled to insist upon literal compliance’; American National Bank v Cashman Brothers Marine Contracting, 550 So 2d 98, 100 (1989): ‘whether and to what extent [a] ... [d]eviation did or did not [affect the credit terms] is irrelevant’.
35 It is currently five banking days in most cases; in certain circumstances, as has been argued earlier in chapter 5, section E, the time is likely to be shorter.
36 Hansson v Hamel  2 AC 36 at 46, per Lord Sumner; Commercial Banking Co v Jalsard  AC 279 at 286, per Lord Diplock (PC).
37 EP Ellinger, ‘New Problems of Strict Compliance in Letters of Credit’  JBL 320, at 321.
38 Equitable Trust Co of New York v Dawson Partners Ltd (1926) 25 Ll L Rep 90 at 51 (col 2).
39 Equitable Trust Co of New York v Dawson Partners Ltd (1926) 25 Ll L Rep 90 at 52 (col 1).
40 See the judgment of Scrutton L.J. in the instant case, Equitable Trust Co of New York v Dawson Partners Ltd (1926) 25 Ll L Rep 90 at 93 (col 2).
41 (1904) 90 LT 618 at 620 (col 2).
42 Equitable Trust Co of New York v Dawson Partners Ltd (1926) 25 Ll L Rep 90 at 55 (col 1).
43 (1960) 30 MLJ 165. For a helpful case note on the actual decision, see EP Ellinger, ‘Strict Compliance with the Terms of Documentary Credit’ (1964) Malayan Law Review 417.
44 612 F Supp 1533 (SDNY 1985).
46 762 F 2d 4 (2nd Cir 1985).
47 41 UCC Rep Serv 2d 618 (SDNY 2000); 2000 WL 254007 (March 7, 2000).
48 Banque de I’Indochine et de Suez SA v J.H. Rayner (Mincing Lane) 476 at 482 (col 1); Kredietbank Antwerp v Midland Bank Plc  1 All ER (Comm) 801 at 806 per Evans L.J.
49 A view shared by the ICC Banking Commission: see note 56. See also Hing Yip Fat Co Ltd v Daiwa Bank Ltd  2 HKLR 35; Rudolph Robinson Steel Co v Nissho Iwai Hong Kong Corp Ltd  1 HKLRD 966; Kerr-McGee Chemical Corp v FDIC, 872 F 2d 971, 973 (1989); Banco General Runinahui SA v Citibank International, 97 F 3d 480, 484 (1996); Banque de L’Union Haitienne, SA v Manufacturer Hanover International Banking Corp, 18 UCC Rep Serv 2d 856 (1991).
50 See, e.g., Flagship Cruises Ltd v New England Merchants, 569 F 2d 699 (1st Cir, CA) (1977), where the credit required all drafts to be marked ‘Drawn under NEMNB Credit No 18506’ and this was satisfied by a draft marked ‘No 18506’; First National Bank of Atlanta v Wynne 149 Ga App 811 (CA, Ga) (1979), where a certificate and a draft were required to indicate ‘credit No S—3753’. It was held that notwithstanding the omission of this information, the beneficiary’s covering letter adequately identified the draft.
51 Tosco Corp v FDIC, 723 F 2d 1242 (6th Cir, CA) (1983), where the legend on a presentment draft showed ‘Drawn under Bank of Clarksville, Clarksville, Tennessee letter of Credit No 105’ rather than ‘Drawn under Bank of Clarksville Letter of Credit Number 105’. Three discrepancies were alleged: (i) change of ‘L’ in ‘Letter’ to ‘l’; (ii) the use of ‘No’ as opposed to ‘Number’; and (iii) the addition of the words ‘Clarksville, Tennessee’. All these were held to be nitpicking; New Braunfels National Bank v Odiorne, 780 SW 2d 313 (1989), where the legend on a presentment draft stated ‘Number 86—122—5’ instead of ‘Number 86—122—S’ was held to be conforming; First Bank v Paris Savings & Loan Association, 756 SW 2d 329 (Tex App) (1988), where it was held that the tendered documents were conforming since they contained the requisite legend irrespective of the addition of the words ‘dated June, 12, 1986, i/a/o $250, 000’; American Airlines Inc v FDIC, 610 F Supp 199 (1985), where the incorrectly stated legend in the draft was not misleading to the bank because the accompanying covering letter correctly contained the requisite number.
52 United Bank Ltd v Banque de Nationale de Paris  2 SLR 64 (HC, S’pore); Golodetz & Co v Czarnikow-Rionda Co, The Galatia,  2 Lloyd’s Rep 450 at 456, Per Donaldson J., aff’d  1 Lloyd’s Rep 453.
53 Golodetz & Co v Czarnikow-Rionda Co, The Galatia,  2 Lloyd’s Rep 450 at 456.
54 Osten Meat Co v First America Bank-South East Michigan, 205 Mich App 686 at 693 (1994).
55 Breathless Associates v First Savings & Loan Association of Murkburnett, 654 F Supp 832, 837–838 (1986).
56 Bank of Cochin Ltd v Manufacturers of Hanover Trust Co, 612 F Supp 1533 at 1537–1540 (SDNY 1985), aff’d 808 F 2d 209 (2nd Cir 1986) at 1540–1541. Accord, Beyene v Irving Trust Co, 762 F 2d 4 (2nd Cir 1985) at 7.
57 See also International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), 2007 Revision, at para 25, explaining that a misspelling or typing error that does not affect the meaning of a word or the sentence in which it occurs does not make a document discrepant, e.g. ‘mashine’ instead of ‘machine’, ‘fountan pen’ instead of ‘fountain pen’. But a description as ‘model 123’ instead of ‘model 321’ would not be regarded as a typing error and would affect the meaning: Bank of Cochin Ltd v Manufacturers of Hanover Trust Co, 612 F Supp 1533 at 1537–1540 (SDNY 1985), aff’d 808 F 2d 209 (2nd Cir 1986) at 1540.
58 International Standard Banking Practice for the Examination of Documents under Documentary Credits (ISBP), 2007 Revision, at para 25; International Standard Banking Practice, ICC Publication No. 745, 2013 edn.
59 Banque de I’Indochine et de Suez SA v J.H. Rayner (Mincing Lane) 476, aff’d  1 Lloyd’s Rep 228.
60 For an instance analogous to the present, Sir Christopher Staughton in Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran  1 Lloyd’s Rep 36 at 41, dealing with the requirement that a bank which has determined that a presentation is not in accordance with a credit and, on that ground, decided to reject the documents must comply strictly with the rejection procedure set forth in the UCP 500, which had been incorporated into the credit. This subject is discussed later in Ch 9.
61 The actual words used were: ‘The above signature is known to me, Secretary to the “Handelsvereeniging te Batavia” (Commercial Association of Batavia, a semi-official institute, performing the duties of the Chamber of Commerce) as that of Mr. J. Droop, sworn broker of this city, making a speciality of the vanilla trade, and the only expert in this trade known to us residing at this port’: reproduced in the judgment of Bateson J. in the trial court, as to which see Equitable Trust Co of New York v Dawson Partners Ltd, 24 Ll L Rep 261 at 265.
62 Equitable Trust Co of New York v Dawson Partners Ltd (1927) 27 Ll L Rep 49.
63 For determination of conformity of transport documents, see Ch 5.
64 Compliance of commercial invoices is discussed in Ch 5.
65 Equitable Trust Co of New York v Dawson Partners Ltd (1927) 27 Ll L Rep 49 at 51 (col 2), per Viscount Cave L.C.; at 53 (col 1), per Viscount Sumner; at 55–56, per Lord Atkinson; at 57, per Lord Shaw.
66 Equitable Trust Co of New York v Dawson Partners Ltd, 24 Ll L Rep 261 at 265.
68 (1926) 24 Ll L Rep 90, respectively at 92 and 94, with Scrutton L.J. saying that the ‘requirement that the signature of the broker should be certified by the “Chamber of Commerce” was satisfied by a certificate from the “Handelsvereeniging”’. Atkin L.J. expressed no opinion on the point.
69 Equitable Trust Co of New York v Dawson Partners Ltd (1927) 27 Ll L Rep 49 at 51. Lord Sumner felt it was not necessary to deal with the issue; other members of the House took no account of it.
70 The leading authorities include Venizelos S.A. v Chase Manhattan Bank, 425 F 2d 461 at 465–466 (2nd Cir 1970); Marino Industries v Chase Manhattan Bank, 686 F 2d 112 at 116 (2nd Cir 1982); Voest-Alpine Int’l v Chase Manhattan Bank, 707 F 2d 680 at 685 (2nd Cir 1983); Westwind Exploration Inc v Homestate Savings Association, 696 SW 2d 373 at 382 (Supreme Court of Texas, 1985); Ocean Rig ASA v Safra National Bank of New York, 72 F Supp 2d 193 199–200 (SDNY 1999).
71  Lloyd’s Rep Bank 173.
72  Lloyd’s Rep Bank 173, 179 (emphasis added).
73 Kredietbank Antwerp v Midland Bank Plc  1 All ER (Comm) 801, esp at 815–816, per Evans L.J. delivering the judgment of the court.
74 Bhojwani v Chung Khiaw Bank Ltd  SLR 128. In this case, the tendered document was a marine policy providing cover ‘from warehouse, West Germany to warehouse Singapore’ instead of ‘from shippers’ warehouse to buyers’ warehouse’. The Court of Appeal of Singapore considered that the document strictly ‘conformed to the true intention of the letter of credit’ ( SLR 128 at 134) (emphasis added).
75 Hing Yip Hing Fat Co Ltd v Daiwa Bank Ltd  2 HKLR 35. The letter of credit specified ‘Cheergoal Industries Limited’ as the account party, but the tendered documents indicated ‘Cheergoal Industrial Limited’ (emphasis added). Kaplan, J. took the view that the mistake was clearly a minor typographical error because there was no evidence that the bank had been misled by the mistake in question; and the error could easily be seen as a mistake in Hong Kong, the business place of the issuing bank, in that English is not the native language of 98%of the population.
76 Vest v Pilot Point National Bank, 996 SW 2d 9 (Ct App, Tex) (1999). The credit required a certificate executed by ‘the judge of Denton County’. But the issuing bank tendered to the applicant for reimbursement a certificate signed by the ‘acting judge of Denton County’. The Court of Appeal of Texas held that the certificate reasonably complied with the credit, most probably an alternative way of saying that the document was a functional equivalence of that required in the credit. See also Voest-Alpine Trading USA Corp v Bank of China, 167 F Supp 2d 940 (2000): the presentation documents bore ‘Voest-Alpine Trading USA’ whereas the credit listed the beneficiary’s name as ‘Voest-Alpine USA Trading’ (emphasis added).
82 196 App Div 504 (1921), aff’d 231 NY 616 (1921).
83 196 App Div 504 (1921) at 506.
84  1 SLR 141. See also Marino Indus. Corp. v Chase Manhattan Bank, 686 F 2d 112 (2nd Cir 1982) (distinguishing Dixon, Irmaos & Cia v Chase National Bank, 144 F 2d 759 (2nd Cir 1944)) and holding (686 F 2d 112 (2nd Cir 1982) at 120) that ‘in the present case there is no evidence of any custom among banks ... to treat striking out of the word “CASH” on the receipt as indicating prepayment of freight ... The usage which controls letter of credit transactions is banking usage, not commercial usage’. Marine Midland Grace Trust Co of New York v Banco del Pais S.A., 261 F Supp 884 (SDNY 1966), where (at 889) McLean J. regarded as ‘immaterial’ the evidence that in Mexico it was not customary in the trade for truckers’ bills of lading to specify that the goods were on board.
85 It was also established in evidence that the measurements of FFA content in terms of oleic acid and lauric acid are technically analogous to the measurements of temperature in terms of Fahrenheit (Fo) and Celsius (Co). Moreover, the standard of measurement is oleic in the trade in the US, and lauric in Europe.
86 See, e.g., Dixon, Irmaos & Cia v Chase National Bank, 144 F 2d 759 (2nd Cir 1944). In this case, it was argued that there existed a general and uniform custom among New York banks, exporters, and importers of accepting, in lieu of a missing bill of lading, a guarantee of a leading New York bank. The Second Circuit held for the seller on the basis that (144 F 2d 759 (2nd Cir 1944) at 762) ‘[n]umerous expert witnesses in the fields of banking and of commerce, testified to the existence of the custom’. cf. Marine Midland Grace Trust Co of New York v Banco del Pais S.A., 261 F Supp 884 (SDNY 1966), where (at 889) the evidence sought to be adduced was denied because it involved merchants rather than bankers.
87 For a case in which the acts of such a bank, including decisions as to the examination and acceptance or rejection of the documents, were held binding on the bank’s principal, an issuing bank in Germany, see Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank A.G.  3 SLR 686, esp at 26–40.
88  2 Lloyd’s Rep 367.
89 See Osten Meat Co v First of America Bank-Southeast Michigan, 205 Mich App 686 (1994): The invoices indicated ‘paid’ whilst the supporting affidavit showed that ‘all the attached invoices were unpaid’. It was held, correctly in my view, that the documents were rightly rejected. By the same token, drafts bearing the beneficiary’s name as ‘All American’ are inconsistent with the invoice reading ‘All American Semiconductor’, and therefore non-conforming: see All American Semiconductor Inc v Wells Fargo Bank Minnesota N.A., 105 Fed Appx 886 (8th Cir 2004); 2004 WL 1729868 (CA 8 (Minn)).
93 The bigger issue of the right to recover a sum of money paid against an indemnity or under reserve in circumstances where the issuing bank subsequently dishonours the documents is discussed in Ch 9, section C.
97 Longman Dictionary of Contemporary English, New Edition 2003, at 252.
99  6 WWR 24 at 32.
100  5 WWR 193 (Carrothers and Esson JJ.A; Lambert J.A., dissenting in part).
101  1 Lloyd’s Rep 236. Noted by EP Ellinger, ‘New Cases on Documentary Credits’  JBL 32 at 35.
102  1 Lloyd’s Rep 236 at 240.
103  1 QB 711 at 721.
104 EP Ellinger, ‘New Cases on Documentary Credits’  JBL 32.
105 (1925) 22 Ll L Rep 447.
106 (1925) 22 Ll L Rep 447 at 454.
107 (1925) 22 Ll L Rep 447 at 457.
108 Art 5 (b), UCP 500. The requirements are not included in the UCP 600, but they nevertheless remain effective at common law: see Marino Indus. Corp. v Chase Manhattan Bank, 686 F 2d 112, at 115 (2nd Cir 1982) (‘The beneficiary must know precisely and unequivocally what the requirements are.’)
109 E.g. Bank of Montreal v Federal National Bank & Trust Co, 622 F Supp 6 (WD Okla) (1984), where an internal inconsistency in the letter of credit was, rightly in my view, resolved against the bank. (‘Blow Out Products Ltd’ and ‘Blow Out Prevention Ltd’, in the first and second paragraphs respectively.)
110 Midland Bank Ltd v Seymour  2 Lloyd’s Rep 147 at 153.
111 The certificate of inspection and analysis featured in the Jalsard and United Coconut cases are illustrative examples. See also the Hong Kong case of Nedcor Asia Ltd v Industrial & Commercial Bank of China, HCCL 304/1998 (Commercial Action No. 304 of 1998). In this case, the defendant issued a negotiation credit which provided for payment against the presentation of, among other documents, the ‘beneficiary’s draft (s) at 90 days sight for 100 percent invoice value on us marked as drawn under this credit’. The question was whether the phrase ‘on us’ was to be restrictively construed, so that the draft drawn on ‘The Industrial and Commercial Bank of China’, without the additional words ‘Shantou Branch’, would be discrepant. Stone J. regarded this argument as ‘risible’ and held for the negotiating bank.
112  1 Lloyd’s Rep 275; noted by Howard N Bennett,  LMCLQ 24.
113 UCP 500, to which the credit was made subject.
114  1 Lloyd’s Rep 275 at 278.
115  1 Lloyd’s Rep 275 at 281.
116  1 Lloyd’s Rep 275 at 278.
117  1 Lloyd’s Rep 275.
119  2 SLR 1 at 14.
120 In addition to Muslim Bank ( 1 Lloyd’s Rep 275) examined in the text, see Bank of Montreal v Federal National Bank & Trust Co, 622 F Supp 6 (WD Okla) (1984).
121 See First State Bank v Diamond Plastics Corp., 891 P 2d 1262 (Sup Ct, Okl 1995). There, a letter of credit provided, in relevant part, that ‘One negotiable Bill of Lading of each set and consular invoice must be forwarded directly to The First State Bank, Ketchum, P.O. Box 750 ... immediately by the bank negotiating the documents. The remaining documents must accompany the drafts’ (emphasis added). In an action brought by the beneficiary against the issuing bank, the Oklahoma Supreme Court (at 1269–70), by a majority of seven to one, considered unreasonable the argument that the documents specified in the clause were only required if the beneficiary elected to approach another bank rather than the issuing bank for negotiation, and then added: (at 1269–70): ‘[W]e find the credit requires the beneficiary or any banks negotiating the letters of credit to present the negotiable bills of lading and consular invoices along with any drafts’. A similar approach was adopted in Bank of Montreal v. Federal National Bank, 622 F Supp 6 (WD Okl 1984).
122 623 So 2d 520 (1993); 18 Fla L Weekly D1370.
123 Venizelos S.A. v Chase Manhattan Bank, 425 F 2d 461 at 465–466 (2nd Cir 1970); Westwind Indus. Inc v Homestate Savings Association, 696 SW 2d 378 at 381 (Tex 1985); Buchbinder v Rony Natanzon, 2006 US App LEXIS 28450, *12 (4th Cir 2006) (‘The determination of whether [a contractual] language is susceptible of more than one meaning includes a consideration of the character of the contract, its purpose, and the facts and circumstances of the parties at the time of execution’).
124 878 F 2d 830 (5th Cir 1989).
125 840 F 2d 554 at 559–60 (8th Cir 1988). See also Brown v United States National Bank of Omaha, 220 Neb 684 (1985).
126 As a matter of general principle, the seller has a duty to examine the terms of a credit and is responsible for any negligent failure to discover apparent ambiguity or inconsistency in the credit. In addition to Coral Petroleum, see, for example, Mutual Export Corpn. v Westpac Banking Corpn., 983 F 2d 420 at 423 (2nd Cir 1993); Bath Iron Works Corpn. v WestLB, 2004 WL 784856, at *3 (SDNY 2004).
127 I.e. the ICC Uniform Customs and Practice for Documentary Credits, the prevailing edition being the UCP 600, to which present reference is being made.
128 The UCP 600. Compare Art 1, UCP 500 which says in relevant part, ‘unless otherwise expressly stipulated in the credit’.
129 HG Beale (ed), Chitty on Contracts, 29th edn, (London: Sweet & Maxwell, 2004) at para 12-079 n 326 and the authorities cited there. See generally Kim Lewison, The Interpretation of Contracts, 4th edn (London: Sweet & Maxwell, 2007).
130 But see EP Ellinger, ‘Developments in Letters of Credit Law’  JBL 58 at 59 (‘Where the bank seeks to contract out of the provisions of the UCP by stipulating for his right to be reimbursed regardless of discrepancies in documents, its safest course is to exclude the duty imposed on it under article 15 [UCP 400, now Art 14 UCP 600]’).
131 I.e. the Unfair Contract Terms Act 1977 (the UK). In Singapore, the legislation (hereinafter the Act) is applicable with some modification by virtue of the Application of English Law Act, Cap 7A. See Ch 1.
132 It defines ‘negligence’ as ‘the breach (a) of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract; (b) of any common law duty to take reasonable care or exercise reasonable skill ...’.
133 In the present context, the subsection may be taken to provide that the issuer cannot by reference to a clause in the credit agreement exclude his liability for negligence except insofar as the clause satisfies the requirement of reasonableness.
134 Under the Act, s 3 (1), (2) (b) and the proviso in relevant part provides that where a party to a contract deals on the other party’s written standard terms of business, that other party cannot by reference to any contract term claim to be entitled to render a contractual performance substantially different from that which was reasonably expected of him, except insofar as the contract term satisfies the requirement of reasonableness.
135 Section 11 (5) of the Act states that it is for the party asserting that a contract term is reasonable to show that it is.
137  1 AC 831. In this case, the question before the House was whether a disclaimer notice which purportedly excluded liability in tort for negligence within the Unfair Contract Terms Act was reasonable. In considering this question, Lord Griffith observed that it is impossible to draw up an exhaustive list of the factors that must be taken into account, but proceeded to set forth what a judge should, at a minimum, consider.
138  1 AC 831 at 858.
139 MP Furmston, Cheshire, Fifoot and Furmston’s Law of Contract, 15th edn (Oxford: OUP, 2007) at 245.
140 For such views, see James E Byrne, Documentary Credit World, June 2006, 19 at 24 (suggesting that the application of substantial compliance standard imposed in the reimbursement agreement in Blonder & Co., Inc v. Citibank, 808 NYS 2d 214 (App Div 2006) relieved the issuer of liability for honour of a discrepant bill of lading). The Citibank case will be discussed shortly. See also William F Savino and David S Widenor, ‘2005-2006 Survey of New York Law: Commercial Law’ (2007) 57 Syracuse L. Rev. 837 at 866 (‘[T]here is no “international standard banking practice” on “substantial compliance” appli[cable] to an applicant’s contractual reimbursement obligations’).
141 Save in the instances specified under Section 5-109.
142 This also derives from the provision of Section 5-103 (c) of the Article, i.e. Revised Article 5, which articulates that ‘the effect of this article may be varied by agreement or by a provision stated ... in an undertaking’.
143 808 NYS 2d 214 (App Div 2006).
144 I.e. Blonder & Co v Citibank, 808 NYS 2d 214 (App Div 2006).
145 808 NYS 2d 214 at 222–223 (App Div 2006).