International Trade Law

International Trade Law

5. Two fundamental letter of credit principles
? The autonomy principle (Article 4, Article 5, Article 7.b and Article 15.a)
? Power Curber International Ltd v National Bank of Kuwait 91981) WLR 1233
? Westpac Banking Corporation The “Stone Gemini”, [1999] FCA 434
? Maurice O’Meara Co v National Park Bank of N.Y., 146 N.E. 636 (1925)
? The principle of ‘strict’ compliance
? Is there a principle of strict compliance?
? Applying for a letter of credit
? Commercial invoice (Article 18)
? Insurance document (Article 28)
? Transport document (Article 20: Bill of Lading; Article 21: Non-Negotiable Sea Waybill; Article 22: Charter Party Bill of Lading; Article 23: Air Transport Document; Article 24: Road, Rail or Inland Waterway Transport Documents; Article 27: Clean Transport Document).
? Complying presentation (Article 2 and Article 14.a)
? Documents must be presented no later than 21 days after the day of shipment (Article 14.c) (compare with Article 43.a UCP 500)
? In any event, documents must be presented on or before the expiry date (Article 6.e), but see also Article 29 (extension of the expiry date)
? Hours of presentation (Article 33)
? Description of goods in the invoice: Article 14.e and Article 18.c (compare with Article 37 UCP 500)
? Data in a document (Article 14.d)
6. Inspection of the documents (Article 14.a and Article 14.b) (compare with Article 13 UCP 500)
? Disclaimer on Effectiveness of Documents (Article 34)
7. Discrepant Documents, Waiver and Notice (Article 16)
? Article 16.a (importance of “may”)
? Waiver (Article 16.b)
? Notice of non-compliance (Article 16.c)
? Courtaulds North America v North Carolina National Bank, 528 F.2d 802 (1975) (4th Circ.)
8. Teletransmitted and Pre-Advised Credits and Amendments (Article 11)
9. Disclaimer on Transmission and Translation (Article 35; Force Majeure (Article 36), and Disclaimer for Acts of an Instructed Party (Article 37)
10. Manner in which payment will be made (see Article 7 and Article 8)
? The concept of Honour (Article 2)
? Payment at sight
? Deferred payment undertaking
3
? Acceptance of a bill of exchange (“draft”)
11. The autonomy principle and the fraud exception
? Sztejn v J Henry Schroder Banking Corporation, 31 N.Y. Supp. 2d 631 (1941)
? Boliventer Oil SA v Chase Manhattan Bank, 1 WLR 392 (1984)
? United City Merchants v Royal Bank of Canada, 1 AC 168 (1983)
12. Evergreen clauses in a letter of credit (compare with ‘revolving credit’)
13. Transferable credit (Article 38)
14. Standby letter of credit (Article 1): ICC International Standby Practices ISP 98
15. eUCP Version 1.1
16. DOCDEX (Documentary Credit Dispute Resolution Expertise)
17. Red clauses in a letter of credit; Revolving letter of credit and back-to-back letter of credit
Part 3 – to be answered
Question One
Oliver lives in the beautiful Hunter Valley, located north of Sydney, Australia. The Hunter Valley is the premier wine-producing region of the state of New South Wales. Oliver had moved to the Hunter Valley after many years of law teaching at Monash University, Melbourne. But upon realising that he did not know any law, he had resigned from the University and had moved to the Hunter Valley to run a winery.
Henry, a legendary Professor of Law at Harvard Law School, decided to start up a small business on the side selling wine to Harvard students in Boston, United States. Henry entered into a written contract with Oliver to buy three standard shipping containers of Oliver’s best Shiraz. The contract included the shipment of the wine from Sydney to Boston by ship. The contract called for the shipment of the goods under an arrival contract. The contract also specified a documentary sale of goods, with payment by letter of credit.
The contract specified that shipment was to be made on or before 15 December 2011 and shipment was made timely. The letter of credit was issued by Henry’s bank, the Harvard Bank, in favour of Oliver as the beneficiary. The letter of credit provided for the payment by the issuing bank of Oliver’s sight draft upon the presentment of a negotiable clean bill of lading. The wine was delivered to the shipping company, and the shipping company issued a negotiable received-for-shipment bill of lading for the wine to Oliver.
The wine was stolen in transit on the ocean by the notorious Robert the Pirate.
Answer the following questions:
(1) Under what circumstances would the UCP600 be applicable to the letter of credit?
(2) What is “sight payment”? In your answer, refer to the relevant Article in the UCP600.
4
(3) What is a negotiable bill of lading and what are the purposes of the bill of lading?
(4) What is a ‘clean’ bill of lading?
(5) What is an arrival contract?
(6) Which Incoterm should Oliver and Henry have incorporated in their contract? Explain the relevance and importance of that Incoterm. Explain whether you would use Incoterms 2000 or Incoterms 2010 and discuss the reasons for your choice.
(7) Is the issuing of a received-for-shipment bill of lading compatible with the Incoterm which Oliver and Henry should have incorporated in the contract?
(8) Is Henry obligated to pay for the stolen goods? Why or why not?
(9) If Henry were to instruct the Harvard Bank to refuse payment on the letter of credit because the wine has been stolen in transit, what would the Bank’s options be upon the presentment by Oliver of the received-for-shipment bill of lading and the sight draft?
Question Two
A Seller in Melbourne, Australia grows and collects various roots and herbs. A major source of her income is the sale of ginseng. The Seller is contacted by a Buyer whose place of business is located in Brussels, Belgium. Buyer wants to purchase a large quantity of ginseng from the Seller. Seller sends the Belgian Buyer a pro-forma invoice indicating the price of ginseng and the conditions under which the Seller is willing to do business. The pro-forma invoice reveals that Seller offers to sell 1000 kilograms of ginseng at AU$150 per kilogram CIF Antwerp (Incoterms 2010). The Buyer, after having studied the pro-forma invoice, sent an order form to the Seller for the purchase of 1000 kilograms of ginseng.
The Seller’s forwarding division prepares the shipment of ginseng. The ginseng is packaged and taken to Melbourne Harbour for loading on the HMS Howard bound for Antwerp. At that time, Seller receives a “received-for-shipment bill of lading” from the Carrier. The Buyer has requested delivery of a “clean shipped bill of lading”. Also, before the cargo was shipped or the “received-for-shipment bill of lading” issued, the ship’s captain promised the Seller orally that the cargo would arrive in Antwerp on or before 28 August 2011.
On the way to Antwerp, the ship called in at a number of ports as the carrier found cargo for the ship; the ship did not arrive in Antwerp until 15 September 2011. Due to recent amendments to the EU Customs law, an increased import duty had become payable on ginseng (and other roots listed in the law) and the market for ginseng had deteriorated substantially. Also, while in transit to Belgium, the shipment of ginseng is rendered useless because a heavy storm soaked 50% of the ginseng cargo with salt water. Upon arrival in Antwerp, the shipment is rejected by the Buyer stating: “The Seller has the risk of loss until the goods arrived in Belgium”. Hence, Buyer refuses to pay for the shipment. The Seller claims that the carrier is liable because the ship was not “seaworthy”.
Answer the following questions:
1. What are the purposes of a “bill of lading”?
5
2. What obligations are imposed on the Seller under a CIF contract (Incoterms 2010)? Who has the risk of loss?
3. What should the Seller do, if anything at all, with the “received-for-shipment bill of lading”?
In addition, give advice to the Buyer about the increased customs duties payable. Would the Buyer be able to recuperate any increased duties from the Carrier?
Question Three
The Murdoch Australia Bank Ltd, an Australian bank, received a cable from an English company, Better Living Plc, requesting that an irrevocable letter of credit be opened in favour of Furniture Unlimited which has its Head Office in Perth, Western Australia. The letter of credit is subject to the UCP 600. Better Living Plc instructed the Murdoch Australia Bank that the letter of credit be for “AU$50,000 against commercial invoice, certificate of inspection, clean shipped bill of lading covering 500 computer desks made of Tasmanian Oak”. The bill of lading presented to the Murdoch Australia Bank by Furniture Unlimited referred to “500 Australian computer desks made of oak”. The Murdoch Australia Bank refused to honour this letter of credit. Furniture Unlimited sued the Murdoch Australia Bank for failing to honour its letter of credit.
Was the Bank correct in denying payment on this letter of credit? Discuss the scope of the doctrine of compliance. Refer in your answer to relevant cases.
Question Four
Andrew (BUYER), an Australian buyer whose place of business is in Sydney, purchased a truck from Glen (SELLER), an American SELLER of trucks whose place of business is in Chicago, Illinois. Andrew needed the truck for a new business hauling trash that the started up to supplement his measly law teaching income. Glen was informed of this use. The experienced and knowledgeable Glen actually recommended the model that Andrew finally purchased. Glen told Andrew that the purchased truck would give him (Andrew) “at least ten years of trouble free service.” Glen, after being told of the proposed use for the truck, told Andrew: “I recommend this model. In my twenty years of selling cars and trucks, I haven’t seen a more reliable model”.
Andrew was shown and given the “Owner’s Manual” which came with the truck. The Manual noted that the “average” life of the engines was expected to be ten years, but that longevity varied depending on use, maintenance and other circumstances. The contract of sale was orally concluded. However, when orally concluding the contract, Glen had mentioned to Andrew that “in case of dispute, the domestic law of the United States will be applied”. Glen, when agreeing to the sale, also pointed out that the Owner’s Manual was part of the contract for sale.
The engine burnt out in twenty-nine months because of a manufacturing defect. There had been no misuse of the truck by Andrew and he also had maintained the truck in accordance with the Owner’s Manual. Andrew is displeased and he wants to avoid the contract.
6
Andrew comes to you for advice. Answer the following questions:
(1) Has a contract for the international sale of goods been formed? If so, what are the terms of the contract?
(2) What is the substantive law applicable to the contract? Give reasons for your view.
(3) Is the truck fit for the particular purpose made known to Seller? If so, discuss the conformity requirements under the United Nations Convention on Contracts for the International Sale of Goods (CISG) in the context of this case.
(4) Under what circumstances would it be possible for Andrew to avoid the contract under the CISG?
(5) What are the consequences of avoidance under the CISG?
(6) Which Incoterm would you advise the parties use in order to ensure the safe delivery of the truck to the BUYER’s place of business in Sydney? Would you use Incoterms 2000 or Incoterms 2010? Discuss the carriage of goods obligations of the SELLER under the relevant Incoterm.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency

Order your essay today and save 10% with the discount code tCPCOVID10