Letters of Credit: The Law and Practice of Compliance by Ebenezer Adodo

Author:Ebenezer Adodo [Adodo, Ebenezer]
Language: eng
Format: epub
Publisher: Oxford University Press, USA
Published: 2014-02-18T00:00:00+00:00

C. Certificate from a Named Party

8.12 As we noted previously,17 credits usually include stipulations for documents certifying the actuality of particular matters. The most familiar subjects of the clauses are a certificate attesting to the condition, quantity, and quality of the goods upon completion of their manufacture or at the point of loading, or, in respect of standby credit, to a party’s failure to carry out a specified contractual obligation. Any such certificate continues to function as part of the primary means by which the applicant for the opening of the credit seeks to significantly diminish, perhaps eliminate, the possibility of the beneficiary or some third party practising a fraud on him. Additionally, it is frequently the main mercantile medium of his acquiring transmittable documentation of the occurrence of a given event. These unquestionably noble objectives apart, the rule of strict compliance requires treatment of the absence of a given stipulated certificate in a tendered set of documents as an unacceptable deviation from the credit, sufficient to deprive the presenting beneficiary or nominated bank of payment.

8.13 We shall examine how the strict rule operates under four heads of cases, namely, credit transactions in which the certificate is to be issued by the (i) beneficiary or nominated bank; (ii) applicant or its representative in the beneficiary’s locality; (iii) issuing bank; or (iv) a party outside the credit scene.

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