Parties

Initiator: Company T, Country H

Respondent: Bank A

Facts of the case

Documentary Letter of Credit ("L/C")

- Type of L/C: Irrevocable and available by payment at sight, subject to UCP 500

- Applicant: Company H, Country C

- Beneficiary: Initiator

- Issuing Bank: Respondent

- Nominated Bank: Company HV, Country H

- Expiry: 31 March 2003, City B, Country H

- Partial Shipments: Not allowed

On 28 January 2003, the Respondent issued an irrevocable L/C providing for sight payment of EUR 200,000 and expiring on 31 March 2003, on behalf of Applicant and in favour of, and advised through the nominated bank to the Initiator, concerning commercial contract(s) (the "Contract") concluded between Applicant and one or more designated third parties for deliveries of pates aro 65 gr (pork liver pate and beef liver pate and chicken pate) in the total volume of min. 40.000.000 pcs and total value min. EUR 3,100,000 and requiring presentation of the following documents:

- Original(s) of commercial contract(s) showing certain main particulars, including, but not limited, to "PRODUCT: PATES ARO 65GR. (PORK LIVER PATE AND BEEF LIVER PATE AND CHICKEN PATE)", and to be originally signed by representative of Company H and the representative of the respective buyer, and other details of commercial contract(s) to be accepted as presented (the "Contract"); and

- Original document denominated "Vollmacht".

Under this L/C, the Initiator presented such documents for the full L/C amount to the nominated bank, and the latter presented the same to the Respondent on 25 March 2003. The Respondent determined that the documents were discrepant and notified the nominated bank by SWIFT message of 27 March 2003 that the documents were held for disposal due to the following discrepancies of the presented Contract:

1. L/C requires product: chicken pate and Contract shows in its clause 0.1 product: chicken liver pate;

2. typing error, instead of "pork" stated "prok"; and

3. not every page is signed or otherwise authenticated, but the last page only, nor is the Contract sealed.

The nominated bank responded on 1 April 2003 that the Contract presented fully corresponded to the L/C, in particular that the nominated bank considers discrepancy 1 as a clerical error, and that the L/C did not require every page of the Contract to be signed or sealed, so that the Contract was to be accepted as presented according to the L/C.

Summary of the case stated by the Initiator

The Initiator in its lawyer's Request of 15 December 2003, requests a DOCDEX Decision to be issued on this case.

With respect to the stated discrepancies the Initiator stresses in particular the following:

- Discrepancy 1 - chicken pate/chicken liver pate:

The Initiator contends that this is no discrepancy, because there is no contradiction between both descriptions. Even an invoice need not mirror image the goods' description in the L/C according to §62 ISBP, and because in other documents the goods may be described in general, but not inconsistent terms pursuant to sub-Article 37(c) of UCP 500.

- Discrepancy 2 - typing error:

The Initiator maintains that this is a mere spelling error which does not make the document discrepant (§28 ISBP).

- Discrepancy 3 - not all pages signed:

The Initiator refers to the document to be considered as a whole and to be signed on the first or on the last page pursuant to §§29 and 30 ISBP, respectively. Further, the Initiator points out that the validity of the Contract need not be checked by the bank, and refers in connection therewith to Articles 13 and 15 of UCP 500.

Summary of the case stated by the Respondent

The Respondent was informed by the Initiator about the intention to apply for a DOCDEX Decision and by the International Centre for Expertise of the receipt of the Request for a DOCDEX Decision by the Initiator, and the Centre sent the Respondent a copy of such Request and invited him to provide an Answer within 15 days. The Respondent, however, neither requested a DOCDEX Decision nor provided an Answer. When returning the documents to the nominated bank with the information that they have not been accepted by the Applicant due to the discrepancies, the Respondent mentioned the following:

- Discrepancy 3: That it is based on the fact that the presented Contract consisted of four loose pages (not even stapled together) and only the last page has been signed (or authenticated).

Analysis

- Discrepancy 1:

The terms and conditions of the L/C stipulate that the goods concerned are "pates ARO 65gr (pork liver pate and beef liver pate and chicken pate" (see field 45 A of the L/C, the "Goods' Description") and that the Contract is to show several main particulars, including "PRODUCT PATES ARO 65GR. (PORK LIVER PATE AND BEEF LIVER PATE AND CHICKEN PATE)" (see field 46 A of the L/C, the "Main Particular").

Such Goods' Description (as stipulated in field 45 A of the L/C) is not mirror imaged in the Contract. Since the Contract, and not an invoice, is concerned here, sub-Article 37(c) of UCP 500 allows for general terms not inconsistent with the description of the goods in the L/C. Such general terms appear inter alia on the cover page of the Contract referring to delivery of

"PORK LIVER PATE (PATES ARO 65GR)

- CHICKEN PATE (PATES ARO 65GR)

- BEEF LIVER PATE (PATES ARO 65GR)",

and are compliant, also having regard to §62 of ISBP.

It is not inconsistent therewith that in various places of this Contract reference to such goods is repeated by using only some of the terms and/or characteristics. It further is not inconsistent therewith if in the heading on page 2 of this Contract the three pate items are headed by "COMMERCIAL CONTRACT OF LIVER PATES 65GR ARO", because this title does not necessarily describe in more detail or correctness the itemized goods correctly referred to in connection therewith in the same heading.

The L/C, however, further expressly requires (in field 46A of the L/C) the Contract to show as a "Main Particular" the product description also quoted supra. Such product description cannot be found in clause 0.1 of the Contract headed "PRODUCTS", where such Main Particular would have to be shown, since details (other than the Main Particulars) of the Contract are acceptable as presented (see item 9 in field 46A of the L/C). The closest similarity is the aforementioned Goods' Description, which does not, however, comply with the respective clearly worded and precisely specified Main Particular required by the L/C terms in respect of such Contract, so that §62 ISBP does not apply. Further, it is inconsistent with such Main Particular required under the L/C, if, as it is the case in clause 0.1 of the Contract, under the title "PRODUCTS", reference is made to "liver Pates" and "liver pates" of three "different sorts: Prok, beef and chicken". This is because the stipulation of the Contract clearly states that the products contracted for is "liver pate" in different sorts, including chicken, while the L/C appears to require "pate(s)", one thereof of "chicken" and others of "pork liver" or "beef liver".

Thus, discrepancy 1, to the extent only that the L/C terms of the Main Particular of the Contract in respect of "product" is concerned, is sound and valid, and can neither be recognized as a clerical error nor be accepted as compliance with this special L/C requirement by general terms. The Respondent's notice of refusal of 27 March 2003, which appears to have been given in good time and in compliance with sub-Article 14(d) of UCP 500, states clearly such discrepancy under its no. 1.

- Discrepancy 2:

The L/C stipulates under description of goods and/or services (field 45 A) and in respect of documents required (field 46A), inter alia, "Pork liver pate", and the Contract stipulates "Pork liver pate" or "Pork liver pates", respectively, on the cover page and in clause 4.2, or in the heading of page 2, as well as in clauses 0.2 and 6, respectively, of the Contract. Since the delivery of more than one unit thereof is agreed in the Contract, the singular includes the plural. In clause 0.1 of the Contract. in connection with the three different sorts of liver pates ,reference is made to "Prok" in addition to beef and chicken.

Therefore, the goods "description" "pork pate" in the Contract corresponds with the respective description in the L/C. The stipulation of "Prok" among the different sorts of pates concerned is not inconsistent therewith, because it is obviously a typing error, since all other respective references in such Contract are to "pork", and because "prok" has no known meaning in the English language, in which the Contract has been and, according to the L/C was to be (see field 46A of the L/C), drawn up. Consequently, "prok" beyond a reasonable doubt does not indicate any good or even ingredient other than "pork" for such pate. Therefore, the present circumstances appear to be at least as obvious as the examples stated in § 28 of ISBP.

- Discrepancy 3:

The formal requirements stipulated in the L/C with respect to the Contract are that it will have to be signed by designated representative of Applicant (whose specimen signature was to be found in an Annex to the L/C), and a representative of the buyer, and that it must be issued in the English language, and that other details of the Contract were to be accepted as presented. The Contract, as presented, appears to comply therewith, as well as with the material terms and conditions stipulated therefore in the L/C (see fields 46A and 47A of the L/C).

But the Contract consists of four pages, of which only the last page appears to bear any signatures or authentication. There does not appear to be any dispute between Initiator and Respondent that these four pages were neither bound nor stapled, nor in any other way affixed to each other. The Contract appears, however, to be sequentially numbered at the bottom of each page by "Page 1/4" and "Page 2/4" and "Page 3/4" as well as "Page 4/4", and each page so numbered bears the same reference in the top right corner, i.e., "metro cash and carry/Company H LIVER PATES 17.03.2003". Furthermore, the numbering of the clauses of the Contract and its wording appear to be consistent and uninterrupted and to refer on each page (at least) once to the goods, i.e., to pork liver pate(s), chicken pate(s), and beef liver pate(s).

Because there are so few pages and such sequential numbering, and such technical references and the cross references in the wording, these four pages appear, beyond any reasonable doubt, to be integral parts of one and the same document, signed where the signature is frequently placed, i.e., on the last page of such document and also referring to the same parties on its page 2.

Decision

If a commercial contract (the "Contract") is required under an L/C and is presented with an explanation which goes beyond the correct description of the goods in the L/C and the Contract, and with a typing error and with the individual pages of the Contract not being in any way affixed to each other, then the issuing bank (the "Respondent") is bound to honour the Contract and other documents presented. This is the case provided that in all other respects the terms and conditions of the letter of credit and UCP 500 (the "L/C") are complied with, and provided further that the additional explanation is not inconsistent with the description of the goods contained in the L/C and the Contract, and that the typing error is obvious and the resulting mis-typed word has no meaning in the language of the Contract, and also that there appear on the face of the Contract unambiguous criteria to determine that the individual pages are integral parts of one and the same document.

These three facts are established in the present case, so that the Respondent would not have been entitled to reject the presentation, including such Contract, on the basis of the terms of the L/C in question and UCP 500, if the L/C had not expressly required under "main particulars" of the Contract a specific product description.

Since the Contract did not show any product description identical, or at least, corresponding to the specifically required "main particular", and referred to "liver pates: prok, beef and chicken" where such "main particular", required in the L/C, concerned inter alia "chicken pate", the Contract presented as a document under the L/C did not comply with the terms and conditions of such L/C.

Due to this non-compliance, the complete presentation under the L/C is not compliant, and the Respondent's refusal thereof is justified under the terms and conditions of this L/C and UCP 500.