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| (d) Application of the strict and substantial standards It is true that most banks do not consider certain discrepancies, such as a typing error, for instance, replacing I with i, etc, substantial because one would not be likely to be misled by such defects. Therefore, typographical errors, unless they constitute a material misdescription, or otherwise affect the validity of a document, will not invalidate the promise. Evidence tendered in Standard Chartered Bank v Pakistan National Shipping Corporation suggested that the practice of document checkers was far more liberal than this, to the extent of routinely ignoring late shipment dates on the basis of speeding up trade flows”. 68 Singular versus plural creates challenges for the courts. Under the strict compliance rule, if a buyer wants the opinion of two experts, it becomes a condition of the letter of credit contract. The assertion for example, that the difference between a certificate of origin (or a certificate of quarantine) as issued by a single expert instead of the required experts was not substantial is highly questionable. It contradicts the old common law rule established 67 See Dolan, at 6.05, fora critique of this approach. 68 Evidence given by Vincent Holley, document checker with Standard Chartered Bank’s export-import department, in Standard Chartered Bank v Pakistan National Shipping Corporation and Others (No. 2) [1998] 1 Lloyd’s Rep. 684, at 699. 69 H. Harfield, Identity Crises in LC Law, Arizona Law Review, vat. in Equitable Trust Company of New York v Dawson Partners Ltd., where the letter of credit required a certificate of quality to be issued by experts who are sworn brokers In communicating this information, the message was altered by the bank’s agent to the effect that a certificate issued by a single expert would satisfy the requirement. The alteration was due to the agent’s telegraphic code which used the same symbol for singular and plural words. The House of Lords held that the applicant was not obliged to reimburse the bank because the terms of the credit had not been complied with 70 In Bankers Trust Co, v State Bank of India, 71 Lloyd L.J. described as trivial that the telex number of the buyer’s office was given as 931319 instead of 981310”. A further example of a trivial defect was given in Kredietbank Antwerp v. Midland Bank plc 72 where Evans L.J. gave as an example an obvious typographical error, such as the possible misspelling of Smith as Smithh”. A case which extended the exception further was Glencore International AG v Bank of China, 73 under which the commercial invoice and certificate of origin both differed from the credit requirements. The letter of credit stated Origin Any Western Brand The invoices described the goods as any Western Brand-Indonesia (Inalum Brand and the certificate of origin certified that the goods were of Indonesian origins (Inalum Brand. The Court of Appeal held that had these been the only defects, that the tender would have been good. 70 (1927) 27 Ll. LR, at 49. 71 [1991] 2 Lloyd’s Rep. 443. 72 Court of Appeal, 28 April, 1999. 73 [1996] 1 Lloyd’s Rep. 135. In another case, however the court held that the examiners could have easily identified the discrepancies as typing errors because the discrepancy in one presented document had been remedied by the contents of other presented documents. The court held that the papers would not have confused anyone if considered as a whole and in context. 75 There are, however, serious questions as to what extent the issuers are expected to make “inter-document“ searches to decide whether a discrepancy is immaterial or not. Is the “inter-document” search job an expectation of the bankers Is it too much to expect the bankers to check the documents not only against the terms of a letter of credit but also to keep combing through the entire presentment to see if the discrepancies encountered in a given paper were truly remedied by the contents of one or more other papers If so in an ordinary documentary examination, what about a situation where 967 pages of documents are presented? 77 Do courts have to use the general reasonableness standard to examine whether the same discrepancy would have confused other document examiners One commentator believes that if the discrepancy could not possibly mislead a reasonable document examiner as he checks the discrepant paper on its own against what the letter requires for that paper, then the discrepancy should be 74 Exotic Traders Far East Buying Office v. Exotic Trading USA, Inc., 717 F. Supp. 14, 9 U.C.C. Rep. Serv. d (Callaghan) 698 ( D. Mass. 1989). 75 Ibid, at 17, 9 U.C.C. Rep. Serv. d (Callaghan) 702. 76 A.J. Givray, Letters of Credit, The Business Lawyer, August vat Lloyd’s Rep. 443 (Eng. CA. disregarded. But if it takes the contents of another paper to remedy the discrepancy, then the discrepancy should not be excused as a harmless error. Enlarging the could not possibly mislead notion may give undue protection to the beneficiary at the issuer’s expense.” 78 Significantly, under the UCP, banks are exempted from being liable for any transmission errors, which to an extent undermines the protection provided by the strict compliance rule. Article 16 of the UCP states that Banks assume no liability or responsibility for the consequences arising out of delay and/or loss in transit of any messages(s), letters) or documents(s); or for delay, mutilation or other errors) arising in the transmission of any telecommunication. Banks assume no liability or responsibility for errors in translation and/or interpretation of technical terms, and reserve the right to transmit credit terms without translating them To permit a bank to claim reimbursement when care and skill are lacking in transmission of information seriously undermines one of the main objects of the parties in using letters of credit 78 Givray, op.cit., at 2390. 79 KS. T. Kim, Updating Living Law Some Reflections on the Forthcoming Revision of the Uniform Customs and Practice for Documentary Credits, in Current Problems of International Download 302.29 Kb. Share with your friends:
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