The thesis covers aspects of the law relating to letters of credit. It deals with the operation of letters of credit with particular reference to the doctrine of strict compliance, the principle of independence, the fraud exception and conflict of laws. According to the principle of independence, banks must make payment in terms of the letter of credit irrespective of any dispute that may exist between the buyer and the seller in an underlying contract or other contracts. Although the principle of independence is clearly established, it is not absolute. An exception occurs in the case of fraud. Thus, if the seller has committed fraud, such as tendering forged documents, the buyer can instruct the bank not to make payment in terms of the credit. If the bank refuses to dishonour the letter of credit, the buyer can apply to a court to interdict the bank from making payment. In South African law the buyer must establish that the seller was party to fraud in relation to the documents presented to the bank for payment before the court can grant an interdict. This thesis also examines the standard of proof of fraud required in letters of credit transactions and proposes a standard of proof which will not unduly favour the seller whose good faith is in dispute. The fast growing technology of computers and telecommunications is rapidly changing the methods of transacting business by paper documentation and letter of credit transactions are no exception. At present the buyer can apply to the bank to issue a letter of credit through the computer and banks also communicate letter of credit transactions through computer networks. However, the beneficiary still has to present documents to the bank for payment in paper form. It is proposed that the Uniform Custom and Practice For Documentary Credits (UCP) be amended to provide for fully computerised letters of credit transactions. Another objective of the thesis is to examine the doctrine of strict compliance. In terms of the doctrine of strict compliance documents presented under the credit must comply strictly with the requirements set out in the credit. If banks are satisfied that the documents presented by the seller strictly conform with the requirements of the credit they are obliged to make payment as required by the credit. It is proposed that the doctrine of strict compliance should not be applied strictly. In other words, the banks should make payment in terms of the credit if the discrepancy in the documents is trivial. The thesis also covers conflict of laws issues. As the UCP does not have rules dealing with conflict of laws, most jurisdictions have developed their own rules to be applied by the courts in cases of conflict of laws. The thesis examines the different rules of conflict of laws as developed and practiced by different jurisdictions.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:rhodes/vital:3710 |
| Date | January 2001 |
| Creators | Makobe, Melanchton Phillip Malepe |
| Publisher | Rhodes University, Faculty of Law, Law |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, LLM |
| Format | 228 leaves, pdf |
| Rights | Makobe, Melanchton Phillip Malepe |
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