Article

Factual Summary: To pay for the shipment of goods from South Carolina to Belgium, the buyer arranged for bank to issue a commercial LC. The LC required an on board port-to-port bill of lading. Two shipments were made and the documents presented under the credit were honored although they were not "on board" bills and, although they contained a signed "on board" stamp, it was not dated. When a third presentation was made, the confirmer examined the documents and paid the beneficiary US$ 132,026.40 and forwarded the document to the issuer. The issuer, however, dishonored on the basis of the absence of the dating of the "on board stamp" as well as another discrepancy not addressed by the opinion. For unexplained reasons, the beneficiary permitted the confirmer to charge back its account for the amount paid. The beneficiary sued the issuer for wrongful dishonor and the parties cross-moved for summary judgment. The trial court granted the issuer's motion, dismissing the action.

Legal Analysis:

1. Bill of Lading; On Board Notation; Dating; UCP500 Article 23: Describing the face of the bill of lading, the court stated that it lacked a date on the "on board" notation. The court stated:

"[T]he pre-printed form did not state that the goods had been loaded on board a named vessel. Thus, the mere signing and dating of the bill of lading was not sufficient under Article 23 to indicate the loading of the goods or the date of such loading. It is true that the stamped wording "ON BOARD" had been placed on the bill of lading, and that there was typed wording indicating that the goods were being shipped "ON BOARD" the vessel. However, neither the stamped wording nor the typed wording was accompanied by any notation giving the date on which the goods were loaded on board.

Consequently, it is clear beyond any triable issue of fact that the bill of lading ... did not comply with the requirements of Article 23 of the UCP. It was not a proper "on board" bill of lading as specified by the LC."

2. Waiver of Discrepancy; Prior Presentations:The applicant argued that the issuer had waived the right to assert the discrepancy because it had honored two prior presentations containing similar discrepancies. The court stated:

"Looking at the facts of the present case, there is no evidence to support the idea that [the issuer's] actions with regard to the first two payments constituted a general relinquishment of rights under the LC. There is no evidence that the maker of the bill of lading ... was misled into believing that there had been any such general waiver of relinquishment of rights. Obviously, [the buyer] had a right to make payment for the first two shipments and had a right to request [the issuer] to pay for those shipments under the letter of credit, despite document discrepancies. But those actions related to those two shipments alone. Consequently, the court holds that there is no triable issue of fact on the claim of waiver by [the issuer]."

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