Letter of Credit: conformity

United Kingdom

In the recent case of Credit Agricole v Credit Suisse, the court dismissed a claim for reimbursement under a letter of credit, where the confirming bank argued that because the accompanying railway bills did not show the date stamp of the sending station in the usual place, and as the letters of credit provided were to be "accepted as presented", the confirming bank was entitled to accept the bills, since it was not possible to be sure from an examination of the bills what the date of shipment was.

The period of presentation under the credit was within 20 days after the date of transportation documents. On the facts it was possible to show the goods had been dispatched more than 20 days before presentation. It was held by the court to be unreasonable for the confirming bank to rely on the dates on the bills as being the date of dispatch of the goods. The railway bills were in standard form for the type of rail journey and contained a place at the bottom left hand side of the bill for a date stamp of the sending station.

Having regard to the significance of the time of shipment it was probable that such bills are invariably correctly stamped, otherwise they would be rejected. On the bills in question, the box was either left blank or stamped but not dated. The claimant knew or should have known that that was the proper place for the date of transport. The claimant was not reasonably entitled to regard the documents as conforming and to certify conformity to the issuing bank.

For further information, please contact Ruth Pedley by e-mail at [email protected] or by telephone on +44 (0)20 7367 2098.