"Risk Factor Caused by Delay." Waiver Permission of Bank

1.
In the case of Seaconsar Far East Limited v Bank Markazi Jomhouri Islami Iran (Body
Corporate)1it was opined that a trivial discrepancy in the context of documentary credit
transactions refers to a minor or insignificant deviation in the documents presented that
does not materially affect the terms of the credit. It is within the allowable margin of error
and does not prevent the clear identification of the goods and linkage to the letter of credit.
Such discrepancies are not sufficient grounds for a bank to reject the documents under the
Uniform Customs and Practice for Documentary Credits.
2. The case contends that the discrepancy in the documents presented under the letter of credit
was trivial and within the allowable margin. The discrepancy was considered cured or curable by
reference to other documents that showed a clear and sufficient linkage of the procès-verbal to
the letter of credit by identifying the goods, stating the contract number, date, vessel, and
counter-signature by the principal.
https://www.shippingsolutions.com/blog/international-letter-of-credit-what-constitutes-a-
discrepancy
referred to— Below
https://clok.uclan.ac.uk/30886/1/30886%20Aujara%20Shamsuddeen%20Final%20e-Thesis
%20%28Master%20Copy%29.pdf
“risk factor caused by delay.”
Waiver permission of bank

Bankers Trust Co v State Bank of India [1991] 2 Lloyd's Rep. 443.
bid, 452.
136
Ibid, 455.
Date of shipment
The position regarding the date of shipment remains unchanged from the old UCP. UCP 600
provides that the date of issuance of the bill of lading is the date of shipment. For multimodal
bills, the date of issuance of the bill of lading is treated as “the date of dispatch, taking in
44
charge or shipped on board and the date of shipment” . If the bills contain a separate dated
on-board notation, then the on-board date will be regarded as the date of shipment, regardless
45
of whether the on-board date is before or after the issuance date of the bill of lading.
UCP 600 Article 19(a)(ii).

45
UCP 600 Article 19(a)(ii), Article 20(a)(ii), Article 21(a)(ii), Article 22(a) (ii).
1
Seaconsar Far East Limited v Bank Markazi Jomhouri Islami Iran (Body Corporate)[1994]
1 A.C. 438
Non-Documentary Conditions
Non-documentary conditions are conditions of payment specified in a letter of credit which

do not require the tender of documents. Non-documentary conditions are problematic because
they require banks to investigate true facts, thereby undermining the documentary nature of
letters of credit. Article 13(c) UCP 500 provided that banks “will deem such conditions as not
stated and will disregard them.” However, the position under the old UCP 500 was further
complicated by ICC Commission on Banking Technique and Practice Position Paper (No. 3)
which provided that banks could only disregard non-documentary conditions if there was no
implicit connection between a non-documentary condition and a document to be tendered.
This meant that under the
64
UCP 600 Article 28(a).
65
However, a technical distinction is made by some insurers in some countries – Byrne (n 21) 215.
66
UCP 600 Article 28(a.
67
UCP 500 Article 34(c).
68
UCP 600 Article 28(f)(iii).
69
Commentary on UCP 600-Article-by-Article Analysis (n 18) 133.
70
R Kreitmen, “UCP 600: One year on (nearly)” <http://www.mantissa.co.uk/support/OneYearOn.htm>
th
accessed 4 January 2010.
UCP 500, banks could sometimes reject documents based on a non-documentary condition.
The following example from Position Paper (No. 3) is a good explanation of the previous
position:
“For example, if a condition in the documentary credit states that the goods are to be of
German origin and no Certificate of Origin is called for, the reference to 'German origin'
would be deemed to be a non-documentary condition and disregarded in accordance with
UCP 500 sub-Article 13(c). If, however, the same documentary credit stipulated a Certificate
of Origin, then there would not be a non-documentary condition as the Certificate of Origin
71
would have to evidence the German origin.”
Article 14(h) UCP 600 retains the position of discouraging non-documentary conditions:
"If a credit contains a condition without stipulating the document to indicate compliance with the condition,
banks will deem such condition as not stated and will disregard it."
Banks should disregard all non-documentary conditions even if there is a connection between
a non-documentary condition and a document which is required by the credit. Banks no
longer have to check if a required document could be linked to the non-documentary
condition.
https://www.letterofcredit.biz/index.php/2018/01/28/late-
shipment-discrepancy/
A bank's undertaking embodied in a letter of credit, constitutes a binding contract between
the bank and the beneficiary. In the same way that a contract can only be altered by the
consent of all parties to it, a bank's undertaking contained in a documentary credit can only
be amended by the bank giving the undertaking and the seller. The consent of the advising
bank is required, if it needs to confirm the credit. For the obvious reason, that the credit is
issued on the buyer's instruction, it is implicitly necessary to have his agreement for any
amendment to the credit. " In practice, the applicant initiates the amendment of the credit
by instructing the issuing bank of such amendment. Such amendment may also be initiated
by the seller. The seller will make such a request, if he is unhappy about the terms and
conditions of the credit at the time the credit is advised to him. Amendment could also take
place where the seller is in need of extension of the shipping period or where the type of
certificate that is required in the credit is not obtainable. If the seller finds the terms of the
credit, as advised to him, are unacceptable, very often, it will amount to a rejection of the
credit. In practice, the seller is often reluctant to object to an amendment that has been
initiated by him, and it may be the case that he is not even entitled to do so, depending on
the merits of each case. Where a seller is faced with an amendment to a credit, which is
unacceptable, he is entitled to inform the bank that it is unacceptable to him, stating that he
intends to comply with the credit as originally advised in accordance with Article 9(d) of the
UCP, which provides that the bank's undertaking cannot be amended without the consent of
the other parties concerned i. e. banks and the beneficiary
Doctrine of strict compliance
Good Faith –
A similar view was adopted in the Canadiancaseof Re EmpressTowers
Ltd and BankofNova Scotia,pg 409-410",whereWallaceJ.A.
saidinhisdissentingjudgment:
"I have always had difficulty in determining what constitutes `good

faith' in contract
negotiations. If one of the parties substantially or `unreasonably'
refuses to accept an
offer or make a counter-offer, the other party usually categorisesthe
first person's conduct as 'refusing to bargain in good faith'. It usually
reflects one party's view of the
conduct of the other party where that person remains adamant and
refusesto move from a bargaining position he or she has adopted..In
my view, where there is neither fraud
nor deceit and one is simply exercising his or her contractual right to
maintain a certain bargainingposition,thequestionof`goodfaith'
doesnotenterintotheissue"219
In the case of Carter v Boehm [1766] 3 Burr, 1905 at 1918. It

should be further noted that despite the silence of English law in the
express
recognition of the notion of good faith, in some case law the duty of
good faith is
in insurance "' The principle of good faith, in apparently
adopted,especially cases. principle of good
accordance with , applicable to all contracts. Therefore, good
faith forbids either party, by concealing what he privately knows, to
draw the other into a bargain, from his ignorance of that fact, the
contrary.
Also in the Article 3 of EC directive on Unfair Terms in Consumer
Contracts , article provides that a term is unfair if “contrary to the
requirement of good faith,it causes a significant imbalance in the
parties rights and obligations arising in contract”.
-by reference to the judgment of Priestley JA in Renard Constructions
(ME) Property Ltd v Minister for Public Works (1992) 26 NSWLR
234 where he
said "[P]eople generally, including judges and other lawyers, from all
strands of the community,
have grown used to the courts applying standards of fairness to
contract which are wholly consistent with the existence in all
contracts of a duty upon the parties of good faith and fair dealing in
its performance. In my view this is in these days the expected
standard, and anything less is contrary to prevailing community
expectations". at 268.
This contention is maintained by Nolan2who assertsthat where a

contract is
concludedby two partiesof similarbargainingstrength,the needfor a
principle of good faith and fairness is much reduced
2
Nolan, 'The Classical Legacy and Modem English 614.contractualobligations ContractLaw' 59 (1996) Modern
Law Review 603,

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1.

referred to— Below

“risk factor caused by delay.”

Waiver permission of bank

UCP 600 Article 19(a)(ii).

Non-documentary conditions are conditions of payment specified in a letter of credit which

"I have always had difficulty in determining what constitutes `good

In the case of Carter v Boehm [1766] 3 Burr, 1905 at 1918. It

This contention is maintained by Nolan2who assertsthat where a

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