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المركز القانوني للمصرف في عقد الاعتماد المستندي : دراسة تحليلية == Legal Position Of The Bank On Documentary Credit An Analytical Study
Author name:
فيصل عدنان عبد شياع
Supervisor name:
خالص نافع امين المهداوي
General topic:
Law
Specific topic:
Civil Law
Degree:
Master
University:
Mustansiriyah University - Faculty Of Law
Language:
Arabic
University location:
Baghdad
First pages:
13T1505 - p.pdf
Abstract:
A documentary credit is a bank`s undertaking to pay against presentation of documents which comply with the terms and conditions of a documentary letter of credit. It is a financial instrument used to finance international business transactions. A primary object of documentary credits is to cater for the intersets of both parties in securing the performance of the underlying contract that gives rise to documentary credit. On the part of the seller , if he parts with the possession and property in the goods or ships them solely based on the buyer`s promise in the contract of sale , the seller may have no effective security against the buyer`s default in payment. On the other hand , if the buyer pays the price before the shipment of the goods , he may not have adequate protection against default in performance by the seller or against his bankruptcy.This primary object which protects both parties` interests in a documentary credit transactions remains pivotal to the utility of documentary credits.The contents of my study included three major chapters divided into subjects , requirements and sections. In my study , I handled the letter of credit and it`s legal organization implying jurisprudent , legislative and judicial opinions. By opening and advising a credit , the issuing bank undertakes to honour the credit irrevocable. The bank commits the seller to pay him provided that he presents the required documents which comply with the terms and conditions of the credit.It is a separate transaction from the sale or other contracts on which it may be based. The bank will in no way take into account the underlying contract even if any reference to it is included in the credit. Thus the buyer can not halt the paymeny or reduce the amount of payment by adducing the low quality of the goods. Furthmmore the banks are in no way concerned with goods , services or performance to which the documents relate , they only deals with documents.The bank makes an examination , on the basis of documents alon , whethwr or not the documents appear on their face to constitute a complying presentation.The UCP600 is bringing in important changes in relation to the compliance standard for examination of a presentation.Especially , UCP600 sub - article 14 - (d) introduced a more relaxed standard for the compliance , requireing that it "not be identical , but must not conflict with" that is much broader than UCP500 reference to consistency.It is somewhat less demanding than the customary strict compliance standard.The documents are submitted to the nominated bank within the period specified in the letter of credit , the issuing bank , the confiriming bank or the nominated bank will have a reasonable time to check the submitted documents , the period for checking the documents is of 5 banking days from day following the reception of the documents. UCP600 provides clear guidance as to the respective roles of the banks in handling documents presented for payment. In terms of examination of documents , the elemination of phrases such as " reasonable care " ,"reasonable time " and " on its face " is meant to facilitate and expedite the process of examination of documents. We also not forgotten to mention the most important documents , which should be included in the letter of credit such as , the commercial invoice , bill of lading , insurance policy , …. Etc , and their compliance with provisions of letter of credit , according with the principle of strict compliance.The actual methods for the maturity of the letter of credit are , one method is to pay in due time , namely at a certain date established in the letter of credit. Another method for the maturity is the payment at sight , and the letter of credit may be paid also by acceptance or negotiation of the promissory notes drawn by the benfficiary.By paying the amounts recorded in the letter of credit , all the obligations of the participants are extinguished,as wall as the obligations undertaken in the main relationships.The obligation of payment under letter of credit is incumbent to the issuing bank or to the confiriming bank if the letter of credit is confirmed. The issuing bank and the confirming bank may nominate another bank to pay the letter of credit , but the nominated bank will make the payment for and on behalf of the issuing bank or confirming bank that appointed it , not on its behalf and as its own obligation. Therfore , Documentary credit has two essential characteristics : (i) the bank`s undertaking to pay the beneficiary is independent of the contract of sale and the contract between the bank and its client; and (ii) the bank will pay only against the precise documents stipulated in the credit.The legal nature of diferent relations established between the parties involved are dealt with in this study , and the different types of credits are discussed.Also , In the sconed chapter the defences available to the bank against the beneficiary`s claim are scrutinized , as wall as the possibility of the bank being interdicted from paying the beneficiary.The legal nature of the relationship between the bank and the beneficiary is focal point of chapter third. we argued the legal basis for the source bank`s commitment letter of credit within the consolidated assets and norms issued by the international chamber of commerce in paris.In discussing the legal nature of letter of credit , we only discussed the jurisprudent theories which contradicted each other in specifying this legal base. Then we mentioned the responsibility of the bank from the apparent matching of the documents to the conditions at documentary credit. Also, analyzing such responsibility within UCP600/2007. The study concluded that the issuing bank is fully responsible to the beneficiary , if it rejected the documents and they were legal and in accordance to the L / C terms and conditions. The bank must be responsible causing any kind of damage to the L/C establisher , if there was inconsistence in carrying out the L/C terms and conditions.
