• Title/Summary/Keyword: Letter of Credit

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Validity of Non-documentary Conditions (신용장의 비서류적 조건의 유효성)

  • Suk, Kwang-Hyun
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.22
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    • pp.137-171
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    • 2004
  • Under Article 2 of the Uniform Customs and Practice for Documentary Credits (1993 Revision. UCP), letter of credit means an arrangement whereby an issuing bank is to make a payment to a beneficiary, or is to accept and pay bills of exchange drawn by the beneficiary, or authorises another bank to effect such payment, or to accept and pay such bills of exchange, or to negotiate, against stipulated document(s), provided that the terms and conditions of the letter of credit are complied with. In letter of credit operations, all parties concerned deal with documents, and not with goods, services and/or other performances to which the documents may relate (UCP, Article 4). It is important to note that under UCP, if a letter of credit contains conditions without stating the document(s) to be presented in compliance therewith, banks will deem such conditions as not stated and will disregard them (Article 13 c). Section 5-108(g) of the Uniform Commercial Code also contains a similar provision. However on several occasions the Korean Supreme Court held that non-documentary conditions in letter of credit governed by UCP could be regarded as valid, although they were not desirable in the context of letter of credit transactions. The rationale underlying the decisions was that parties to the letter of credit transactions are free to determine the terms and conditions of the relevant letter of credit. After reviewing the relevant provisions of UCP, UCC, the International Standby Practices (ISP98) and the Supreme Court decisions of Korea, the author suggests that we classify conditions that do not require any documents (so called apparent non-documentary conditions) into two categories and treat them differently. There are apparent non-documentary conditions that are consistent with the nature of letter of credit and those which are inconsistent with the nature of letter of credit. In the first category there are two sub-categories, (i) those which are valid and (ii) those which are invalid and thus should be disregarded. In the second category there are two sub-categories, (i) those which are invalid and thus should be disregarded and (ii) those which are valid but deprive the instrument of the nature as letter of credit.

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Classification and Practical Consequences of Malicious Additional Conditions from Letter of Credit (신용장 악의적 부가조건의 유형과 실무상 유의점)

  • KIM, Hee-Kyung;PARK, Kwang-So
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.76
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    • pp.103-123
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    • 2017
  • If additional condition in letter of credit is used in malicious way, it affects the international trade transaction in jeopardy. Therefore, it's significant to identify whether additional conditions are malicious or ordinary in the transaction with letter of credit. In normal cases, thanks to lots of useful features as an international payment method, such as security of payment, legal protection, and versatility, a letter of credit is widely used in international trade. However, even with these advantageous features, a letter of credit is complicate and costly to use, compared to other payment methods. Furthermore, due to its principle of independence from underlying contract, a use of letter of credit creates another type of concern for proper handling and needs significant caution upon field use. At some points, malicious additional conditions are used for buyer's advantage in deal making and fraud instance in worst situation. In addition, some countries request malicious conditions against sellers as a non-tariff barrier. Therefore it's extremely important to recognize whether malicious additional condition exists in letter of credit and, if so, how to deal with it. This study delivers the information to distinguish and categorize the malicious conditions in various cases and to figure out how to deal with them for safer trade with less risk.

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A Study on the Cancellation and Amendment of Letter of Credit (신용장의 취소 및 조건변경에 관한 연구)

  • Lee, Bang-Sik;Park, Suk-Jae
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.50
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    • pp.89-108
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    • 2011
  • This work intends to study some issues in relation to the cancellation and amendment of letter of credit. Those issues in relation to the cancellation are the significance and formation time of cancellation of letter of credit and some points for practical attention of UCP 600 in the case of cancellation of letter of credit. Those issues in relation to the amendment are the significance and formation requirements of amendment of letter of credit and some points for practical attention of UCP 600 in the case of amendment of letter of credit. If exporters receive letters of credit from foreign countries, they must confirm the indication of irrevocable letter of credit. When they find revocable letters of credit, they should amend the credits to be irrevocable credits. If issuing banks amend letters of credit against beneficiaries, the banks should receive the beneficiaries' consent. If amendments devalue applicants' expectations in the underlying transaction, the applicants for whom the credit issues are not liable to reimburse. Beneficiaries and issuing banks may amend a credit, but the issuing bank acts at its own peril if it does not obtain the applicant's consent.

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A Study on the Some Problems in Relation to the Issuance of Letters of Credit (신용장의 개설 관련 제 문제에 관한 연구)

  • Lee, Bang-Sik;Park, Suk-Jae
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.46
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    • pp.159-177
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    • 2010
  • This work intends to study some problems in relation to the issuance of letters of credit. Those problems are the delay of issuing letters of credit, the reissuing letters of credit, and the issuing letters of credit in the third party's name. Sellers and buyers must keep in mind that the supply of letter of credit by buyer is the condition precedent for a seller's shipment obligation. A seller has no obligation to ship the goods until he receives the letter of credit by buyer's bank, issuing bank. An issuing bank can have the risk that an original letter of credit and a reissued letter of credit can be used double in the exporting country. The most safe method for issuing bank is to cancel the original letter of credit and to reissue a new letter of credit. When an issuing bank issues a letter of credit in the third party's name, the bank should investigate the background of the transaction and give the buyer a proper line of credit.

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A Study of the Scope and the Electronization of Electronic Letter of Credit in the Practitioner's Perspective (전자신용장의 활용범위와 '전자화' 정도에 대한 연구: 실무자적 관점을 중심으로)

  • Chung, Yong-Kyun;Jeong, Jae-Yeon
    • International Commerce and Information Review
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    • v.15 no.2
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    • pp.429-455
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    • 2013
  • This paper investigates the extent and scope of electronization of Letter of Credit and examines the obstacles in the course of electronization of Letter of Credit. For this purpose, this paper adopts two track methodologies. First, we study the electronization of Letter of Credit in the macro perspective. It means that we analyze the scope and the extent of electronization of electronic Letter of Credit in the national economy as a whole. Second, we utilize the case study approach to examine the electronization of Letter of Credit in micro perspective. In other words we examine individual commercial banks in Korea. For this purpose, we analyze the data from two commercial banks out of four largest domestic banks in Korea. For example, we select two commercial banks in Korea and ask current status of electronization of Letter of Credit, i.e, the utilization of EDI L/C, e-L/C, and e-B/L. A major finding of our study is that the extent of electronization is not negligible in micro perspective as well as in macro perspective. In micro perspective, two commercial banks utilize EDI letter of credit in a critical sense. On the other hand, they seldom uses e-L/C and e-B/L in international transaction. This study shows that major bottlenecks for the electronization of Letter of Credit are pessimistic perception of SME entrepreneurs toward the electronization of Letter of Credit and the high costs of system building. We conclude that unlike superficial perception, there is a considerable progress toward the electronization of Letter of Credit in micro perspective.

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A Study on the Problems and Instructions of Negotiation Before Maturity under Deferred Payment Letter of Credit - Focus on the Cases of Different Countries - (연지급신용장 만기전 매입의 문제점과 유의사항에 관한 연구 -각국의 판례를 중심으로-)

  • Kim Kyung-Bae
    • Journal of Arbitration Studies
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    • v.16 no.2
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    • pp.213-238
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    • 2006
  • Deferred payment letter of credit is the L/C that makes the issuing bank to pay a beneficiary at maturity stipulated in the credit. In this deferred payment letter of credit transaction, is it possible that a confirming or nominating bank payor negotiate before maturity? and the confirming or nominating bank have legal protection when paid or negotiated before maturity? These problems are raised in argument. By the way, Korea, Switzerland, Germany, and Italy are positive on the above question, but France, United Kingdom, and Singapore are negative. Therefore, when using deferred payment letter of credit, it is required to keep in mind that the understanding of maturity stipulated in the credit is different among countries, legal principles of each nations, and researchers. And other problems are raised also as follows; the application of Fraud Rule and principle of independence and abstraction as nature of credit, when to pay credit amount to beneficiary, and refusal of payment due to poor quality. Finally, it is required to use deferred payment letter of credit, after full understanding of deferred payment letter of credit pointed out in this paper.

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A Study on the Applicability of Strict Compliance of the Documents on the Contract for the International Sale of Goods (국제물품매매계약에서의 교부서류에 대한 엄격일치원칙의 적용가능성 연구)

  • Park, Nam-Kyu
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.51
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    • pp.187-210
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    • 2011
  • International transactions have the threat of non-payment by the buyer or non-performance by the seller. Parties tend to search for additional means of securing performance and payment beyond the mere agreement in the contract. Such security may be achieved by means of a letter of credit. When contracting parties have agreed to pay by means of a letter of credit, the buyer's bank takes upon itself the obligation to pay the purchase price when the seller tenders the documents that are stipulated in the letter of credit. The documents must comply strictly with the terms of the credit.. The documents play a crucial role in letter of credit transaction. The principles of abstraction, separability and strict compliance governing the letter of credit transaction are considered. The concept of fundamental breach of Article 25 CISG was discussed. This article examines whether a failure to deliver documents conforming to the terms of the letter of credit can constitute a fundamental breach of the sales contract as defined by Article 25 of the CISG by the seller and thereby enable the buyer to avoid the contract. For letter of credit transactions it should be accepted that the delivery of non-performing documents constitutes a fundamental breach, if the result of this breach is that the bank refuses to pay the price for the goods. On the other hand, in the interpretation of Article 25 CISG, it should be noted that if the parties have agreed to payment by means of a letter of credit, they have simultaneously agreed to apply the strict compliance principle to the delivery of documents in the sales contract. Finally the parties should ensure that inconsistency between the requirements under the documentary credit and the requirements under the contract of sale is avoided, since the buyer may be in breach of his payment obligation if the seller cannot get paid under the documentary credit when his documents conform with the contract of sale.

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A Study on the Transfer of Letter of Credit in the UCP600 - Focusing on Comparing with Transfer of drawing rights in the ISP98 - (신용장통일규칙(UCP600)상 양도에 관한 연구 - 보증신용장통일규칙(ISP98)과의 비교를 중심으로 -)

  • Park, Se-Hoon;Choi, Young-Joo
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.53
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    • pp.75-97
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    • 2012
  • This study primarily concerns the transfer of letter of credit. A transferable credit is a credit that clearly specifies it is 'transferable' and may be made available in whole or in part to second beneficiary by the request of the first beneficiary. the transfer of the credit is available where the seller as a middleman in intermediate trades purchases from domestic and international supplier. The purpose of this study is to examine the transfer of letter of credit in the UCP600. Having recognized the differences, the study analyzes the transfer of letter of credit under the UCP600 in comparison to those under the ISP98. The ISP98, like the UCP600, stipulates for the requirement of transfer, the number of transfer, conditions of transfer, the replacement of the name of first beneficiary.

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A Study on Non-documentary Condition in L/C Transactions (신용장상 서류비지정조건의 취급에 관한 소고)

  • Kim, Ki-Sun;Kim, Young-Hoon
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.42
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    • pp.109-132
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    • 2009
  • The purpose of the introduction of this article is as follows. It was frequent to put a condition on the letter of credit without stating corresponding document. But these attempts are very dangerous to the letter of credit operation. That is, if these types of conditions would be permitted in letter of credit, the independence principle must be collapsed. So these conditions must be disregarded in order to safeguard the independence principle. It is why UCP600 article 14(h) writes that if a Credit contains a condition without stating the document(s) to be presented in compliance therewith, banks will deem such conditions as not stated and will disregard it. But scope of this article 14 should not be limited by the conditions which do not state the document to be presented in compliance therewith. That is, the purpose of this article is to preserve the independence principle, so, if it is impossible to ascertain satisfaction with a condition, it should be disregarded as the non-documentary condition, even if the condition is included in the letter of credit together with document to be presented. Conclusively, whether or not a condition would be regarded as the non documentary condition depends on whether compliance of such condition is ascertained by presented documents stipulated in the letter of credit.

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A Study on the Nature of the Electronic Letter of Credit Transaction and the Presentation of the Documents (전자신용장의 본질과 서류의 전자제시에 관한 연구)

  • Choi, Seok-Beom
    • International Commerce and Information Review
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    • v.2 no.1
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    • pp.67-95
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    • 2000
  • Owing to the Boero Service, Global Trading will be materialized as international Business to Business E-Commerce. There are three principles in the letter of credit transaction, that is to say, independence and abstraction, document dealing, strict compliance. In the electronic letter of credit, these principles are called as independence and abstraction, electronic document dealing, strict compliance. As a joint venture between SWIFT and TT Club, bolero.net is changing the way the world trades by providing a web-based, paperless mode of commerce that is designed to become a global standard. As bolero.net supplies the service of the title registry resolves the problem of Electronic Bill of Lading, the electronic letter of credit will be easily introduced. Thus, this study deals with the Nature of the Electronic Letter of Credit Transaction and the Presentation of the Documents, in particular, the Bolero Bill of Lading.

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