Jeremy,
Which means, if I understand you, that it would suffice to render DCs available by acceptance to settle the issue?
Regards
Daniel
Sanction clause in a usance L/C
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AsifMahmoodButt
- Posts: 89
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Sanction clause in a usance L/C
Jeremy,
I am slightly confused here, how would a bill presented under a letter of credit be independent of the letter of credit.
Regards
Khalid
I am slightly confused here, how would a bill presented under a letter of credit be independent of the letter of credit.
Regards
Khalid
Sanction clause in a usance L/C
Daniel,
It would (if I have understood you correctly) provided the acceptor did not seek to condition their acceptance in any way, e.g. with a ‘sanctions clause’. As UCP600 does not define what is meant by acceptance the question of what constitutes ‘acceptance’ for the purpose of Articles 2 (honour), 7 etc is I think left to the applicable law.
Khalid,
Under a bill of exchange the obligations and rights of the parties are determined by the terms of the bill and the bill alone. Thus, the terms of the underlying contract or the documentary credit under which it has been drawn are not, in principle, relevant to the obligations and rights of the parties. Accordingly, if a bank accepts a bill under a credit its obligations are determined exclusively by the terms of the bill and nothing else. Thus if the bank later dishonours it the bank can be sued on the bill alone (i.e. without any reference of any kind to the credit at all), the credit alone or both. Suing on the bill alone is probably best as among other things the plaintiff will probably be able to obtain –where it exists- ‘summary judgement’.
Regards, Jeremy
[edited 4/5/2012 4:17:28 PM]
It would (if I have understood you correctly) provided the acceptor did not seek to condition their acceptance in any way, e.g. with a ‘sanctions clause’. As UCP600 does not define what is meant by acceptance the question of what constitutes ‘acceptance’ for the purpose of Articles 2 (honour), 7 etc is I think left to the applicable law.
Khalid,
Under a bill of exchange the obligations and rights of the parties are determined by the terms of the bill and the bill alone. Thus, the terms of the underlying contract or the documentary credit under which it has been drawn are not, in principle, relevant to the obligations and rights of the parties. Accordingly, if a bank accepts a bill under a credit its obligations are determined exclusively by the terms of the bill and nothing else. Thus if the bank later dishonours it the bank can be sued on the bill alone (i.e. without any reference of any kind to the credit at all), the credit alone or both. Suing on the bill alone is probably best as among other things the plaintiff will probably be able to obtain –where it exists- ‘summary judgement’.
Regards, Jeremy
[edited 4/5/2012 4:17:28 PM]
Sanction clause in a usance L/C
Jeremy,
In Switzerland, according to the textbook, you cannot condition your acceptance.
Unfortunately, I cannot find it anymore but I think there has been a legal case in France where the judge said that a dishonest beneficiary should not be protected by a credit available by acceptance more than by a credit available by deferred payment. Of course with UCP 600 12b, 7c and 8c, things have changed (maybe).
In Switzerland, according to the textbook, you cannot condition your acceptance.
Unfortunately, I cannot find it anymore but I think there has been a legal case in France where the judge said that a dishonest beneficiary should not be protected by a credit available by acceptance more than by a credit available by deferred payment. Of course with UCP 600 12b, 7c and 8c, things have changed (maybe).
Sanction clause in a usance L/C
Daniel,
Section 19 of the Bills of Exchange Act 1882 states:
“(1) An acceptance is either (a) general or (b) qualified.
(2) A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in expressed terms varies the effect of the bill as drawn.
In particular an acceptance is qualified which is—
(a) conditional, that is to say, which makes payment by the acceptor dependent on the fulfilment of a condition therein stated:
(b) partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn:
(c) local, that is to say, an acceptance to pay only at a particular specified place:
An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere:
(d)qualified as to time:
(e)the acceptance of some one or more of the drawees, but not of all.”
What is permitted and is not permitted by the words “A qualified acceptance in expressed terms varies the effect of the bill as drawn” I cannot say.
As to the French judge, I have no quarrel with the sentiment expressed. What of course is a different matter is the rights of a good faith holder that is not the beneficiary-drawer, as would appear to be the case in Shahed’s example.
Regards, Jeremy
[edited 4/5/2012 4:30:20 PM]
Section 19 of the Bills of Exchange Act 1882 states:
“(1) An acceptance is either (a) general or (b) qualified.
(2) A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in expressed terms varies the effect of the bill as drawn.
In particular an acceptance is qualified which is—
(a) conditional, that is to say, which makes payment by the acceptor dependent on the fulfilment of a condition therein stated:
(b) partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn:
(c) local, that is to say, an acceptance to pay only at a particular specified place:
An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere:
(d)qualified as to time:
(e)the acceptance of some one or more of the drawees, but not of all.”
What is permitted and is not permitted by the words “A qualified acceptance in expressed terms varies the effect of the bill as drawn” I cannot say.
As to the French judge, I have no quarrel with the sentiment expressed. What of course is a different matter is the rights of a good faith holder that is not the beneficiary-drawer, as would appear to be the case in Shahed’s example.
Regards, Jeremy
[edited 4/5/2012 4:30:20 PM]
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AsifMahmoodButt
- Posts: 89
- Joined: Fri Apr 05, 2019 5:21 pm
Sanction clause in a usance L/C
Jeremy,
Thanks for the clarification. So if I have understood correctly under an acceptance credit the issuer prior to creating an acceptance may reject the documents containing any sanctioned elements but may be prevented from claiming that right post acceptance. Regards Khalid
Thanks for the clarification. So if I have understood correctly under an acceptance credit the issuer prior to creating an acceptance may reject the documents containing any sanctioned elements but may be prevented from claiming that right post acceptance. Regards Khalid
Sanction clause in a usance L/C
You have understood correctly where a ‘sanctions clause’ is involved.
Sanction clause in a usance L/C
Would you accept to issue a credit not specifying the origin of the goods if the law of your country imposes sanctions for goods originating from some countries ?
What if the IB receives documents indicating an origin of goods prohibited by the law ?
Regards
Antoine
What if the IB receives documents indicating an origin of goods prohibited by the law ?
Regards
Antoine