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Note: Trafigura Beheer BV, the seller, and another company identified only as "BSS", contracted for the sale of industrial gas oil with payment to be by LC. Usty Bank issued the commercial LC for the account of another company, BCL Trading BmbH, the applicant. The LC contained the provision "Buyer shown other than applicant acceptable." The LC appeared "to have been obtained by applicant in performance of the joint venture contract with BSS." The joint contract, of which the beneficiary was unaware, "made provision for BSS to conclude contracts in the petroleum product market with applicant arranging finance, the two companies sharing any profit, but BSS bearing any loss." At the same time, the applicant contracted with an ultimate purchaser to sell the industrial gas oil. Upon receipt of the gas oil, Litex, the ultimate buyer, complained to applicant about the quality of the cargo and sought to return it. To settle this dispute, the ultimate buyer and BSS entered into an agreement whereby the ultimate buyer would return the cargo to BSS. Subsequently, the beneficiary drew on the letter of credit, although the court stated that "since delivery had already been accomplished to Litex, it [was] not entirely clear what bills were presented for negotiation under the letter of credit." The issuer dishonored although applicant notified the bank that it accepted the discrepancies. The beneficiary then sought payment from the applicant and sued the applicant for payment for the goods. The beneficiary moved for summary judgment on the theory that the applicant, rather than BSS was the true buyer. The beneficiary claimed that BSS was acting as an agent of the applicant while the applicant claimed to be acting as the agent of BSS. The Queen's Bench Division (Commercial Court), Steel, J., denied the beneficiary's motion for summary judgment. The court concluded that while it was unlikely that BSS could be considered the buyer, it was not impossible and on that basis denied the beneficiary's motion for summary judgment. The court noted that the applicant and the beneficiary had a long-standing relationship whereby the applicant executed trade contracts and the beneficiary simply furnished finance. Also, the court pointed out that the applicant "intervened [in] contractual specification and the appointment of agents, without any suggestion that it was acting in a representative capacity." The court also noted that "It was only in regard to documentary requirements under the letter of credit that [BSS] described themselves as acting on behalf of the beneficiary." Despite such language in the LC, the court could not conclusively determine that BSS was acting as an agent of the applicant.

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