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Note: To pay for steel pipes, Onesteel Trading Pty Ltd. (Buyer/Applicant) provided an LC issued by ANZ Bank for AU$3,954,207.36 in favor of Capital Steel & Pipe Pty Ltd. (Seller/ Beneficiary). When Seller/Beneficiary realized that it could not deliver the goods in a timely fashion due to labor problems, the LC was amended to permit partial drawings and to change the latest date for shipment. Although Seller/ Beneficiary made a partial shipment and drawing, which was honored, it failed to ship the entire quantity agreed under the contract. Buyer/Applicant covered by purchasing other goods and sued Seller/Beneficiary for breach of contract, seeking the cost of covering the order and consequential damages.

The New South Wales District Court, Rolfe, J., entered judgment for Buyer/Applicant.

Seller/Beneficiary had argued that there was no contract because there was no agreement regarding the terms of the LC. The contract terms were that "payment was to be made by irrevocable letter of credit payable at sight". The Judge noted that there was no evidence that the credit did not satisfy the contract. He also noted Seller/Beneficiary's request for an amendment. The Judge ruled that "as a matter of principle, an amendment to the terms of a letter of credit in the context of a contract for the sale of goods can constitute a variation to the contract of sale", but rejected Seller/Beneficiary's argument that the amendment of the LC allowing partial shipment and drawing represented a variation of the time constraints of the contract.

[JEB/mcb]

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