Tenor of Draft

hatemshehab · Post by **hatemshehab** » Sun Apr 07, 2002 1:00 am

I do apologize for not being able to respond on time on this subject matter as I am training in Jeddah from 6-17/April 2002. I hope that I will have a chance to say something at the weekend.

HATEM

NigelHolt · Post by **NigelHolt** » Mon Apr 08, 2002 1:00 am

T.O.,

I’m sorry, but you seem to me to be re-iterating points you’ve already made and with which I have already dealt. I can only quote the following in my final submission:

‘Documentary Credits’ (3rd edition) by (Judge) Raymond Jack, (barristers) Ali Malek & David Quest:

“(5) Drafts – bills of exchange

8.147 In some transactions where the credit called for a draft, the draft may seem of little importance as, for example, where a sight draft on the issuing or confirming bank is required. Even in these instances the principle of strict compliance should be adhered to…… An argument was advanced in Kydon Compania Naviera SA v National Westminster Bank Ltd, the Lena in relation to a requirement for a sight draft and was rejected. The draft presented must comply with the terms of the credit. Thus it must be drawn by the correct party or parties – (see Elder Dempster Lines Ltd v Ionic Shipping Agent Inc) and on the correct party (The Lena)

8.148 The draft must have correct time for payment, ie at sight, a period after sight, or after bill of lading date, etc …… [the BEA 1882 is then quoted]."

Law of Bankers’ Commercial Credits (8th edition) by Richard King (barrister):

“1.10 …… Historically the normal operation of a credit took the form of payment or negotiation (or possibly acceptance) of bills of exchange (DRAFTS) …..”. [emphasis added]

Jeremy
[edited 4/8/02 2:51:52 PM]

PGauntlett · Post by **PGauntlett** » Mon Apr 08, 2002 1:00 am

Malik and Quest might well have to revise paras 8.147/8.148 in a few weeks' time......
There is a view that under a usance l/c, obligation to pay at maturity still exists despite minor irregularities in B/E (on basis that such draft is not a doc actually required by applicant. In fact, Drawee is only entitled to it after payment at maturity)

NigelHolt · Post by **NigelHolt** » Mon Apr 08, 2002 1:00 am

Phil,

Thanks for putting me on notice re the above; I’ll be in contact -outside the Forum- for further news in a few weeks time!. I would just make one observation; I would not question (& hope I have not given this impression) a bank’s obligation to pay -at maturity- a technically defective bill that it has accepted under a credit.

Regards, Jeremy

[edited 4/9/02 9:40:50 AM]

larryBacon · Post by **larryBacon** » Fri Apr 12, 2002 1:00 am

It is clear from Article 2 i & 2 ii that, in terms of the UCP, "draft" is a synonym for bill of exchange. Therefore, issues of law regardless of legal domicile, should take account of this.

Laurence

NigelHolt · Post by **NigelHolt** » Mon Apr 22, 2002 1:00 am

Hello all,

If we had only bothered reading Article 2 (i & ii) we'd have saved ourselves alot of time & effort on the 'does 'draft' = 'bill of exchange'' question.

Jeremy

hatemshehab · Post by **hatemshehab** » Mon Apr 22, 2002 1:00 am

Yes, that’s why I still feel I had to re-read UCP500