• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.16
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• pp.7-34
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• 2001

This Study analyzes the fact that whether or not, the applicant, by failing to object promptly to the facial discrepancies of the presented documents and to return those documents to the issuing bank, has waived his right to sue for breach of the Application agreement based on the recent Korea-US Case law. Some commentators claim that an applicant has a duty to notify the issuing bank within a reasonable time after receiving the documents that they do not comply with the letter of credit requirements and to return those documents to the issuing bank, and also suggest that a failure to do so result in a waiver of discrepancies that operates as a matter of law. But such decisions make little sense in letter of credit transaction. Unless otherwise agreed, Applicant agreement does not require that the applicant notify the issuing bank of any facial discrepancies of the documents or return those documents. Moreover there is no support in the body of law, i.e., UCP 500 or the Revised UCC Article 5, for an automatic waiver or preclusion arising from the applicant's failure to object promptly. In addition, beyond the lack of authority to support an automatic waiver arising from the applicant's failure to object and return the documents, in a letter of credit transaction the issuing bank is the only party charged with the duty of scrutinizing documents. Therefore, if there are discrepancies, it is the bank that should have to seek an express waiver from the applicant ; the issuing bank should not avoid responsibility for failing to notice discrepancies because the applicant was slow to scrutinize the documents closely or because the applicant failed to inform the issuing bank of such discrepancies. Requiring that applicants inspect documents independently defeats the purpose of retaining the issuing bank, erodes the bank's responsibility to perform its role diligently, and may result in the bank avoiding liability despite negligent payment. If the bank wants to require an applicant to report discrepancies promptly, he may include a provision in the Application agreement limiting the time limit within which the applicant must give notice of facial discrepancies and return the documents. This approach will ensure the continued wide-spread use of documentary credit as a reliable payment mechanism.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.12
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• pp.461-494
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• 1999

This study is to analyse the applicability of governing law in multi-party contractual relationship of letter of credit. And this study is also to suggest the limits of the possibility of applicable law in multi-party contract. The contract of letter of credit constitutes complex relationship, i.e., applicant -beneficiary, applicant-issuing bank, issuing bank-intermediary bank ect. The law applicable to letter of credit should not use a singular governing law in all credit transaction as sales contract. To solve these problems, the author analysed the law applicable to the credit under multi-party contractual relationship as follow : (1) the principle of party autonomy (2) In the absence of express agreement with regard to the law applicable to the contract, lex loci contractus, lex loci solutionis, the law intended by the parties, the law with which contract is most closely connected. Accordingly, when attempting to ascertain the law governing the credit, it should be borne in mind that the credit involves several contractual relationships. I would like to conclude as follows: 1. The contract between the applicant and the Issuing bank is to be governed by the law of the country where the contract is made, and in which the bank carries on business and has issued the credit. 2. When it comes to the beneficiary-Intermediary bank relationship the following rule is given : The liability of an intermediary bank to the seller is governed by the law the country where the intermediary bank is operating if it is acting as principal. If, however, it is acting as agent(advising bank), it will be the law of the country where his principal is situate. 3. The contract between the beneficiary and the Issuing bank is governed by the law of the country where the payment is to be performed. 4. The contract between the Issuing bank and Intermediary bank is governed by 1) the law of the issuing bank is applicable if the intermediary bank only advises the credit, 2) the law of the issuing bank is applicable but if the intermediary bank makes payment, accepts or negotiates drafts against the tender of the documents, i.e., act as the bank dffecting the payment., 3) the law of the confirming bank is applicable if the irrevocable letter of credit is confirmed by the intermediary bank

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.12
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• pp.429-460
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• 1999

The letter of credit is quintessentially international. In the absence of international legal system, a private system based on banking practices has evolved, commanding the adherence of the international letter of credit community and providing the foundation of th reputation of this instrument. To maintain this international system, it is vital that international standard banking practice should not be subject to local interpretations that misconstrue or distort it. The UCP is a formulation of international standard banking practice. It is neither positive law nor a "contract term" in any traditional sense and its interpretation must be consonant with its character as a living repositary of international understanding in this field. As a result, the interpretation and application of specific articles of the UCP must be consistent with its evolving character and history and with the principles upon which sound letter of credit practice is predicated. This study, especially, focuses on article 13 and article 14 of the UCP500. Article 13(b) of UCP500 stipulates that banks will have a reasonable time, not to exceed seven days, to examine documents to determine whether they comply facially with the terms of the credit. The seven-day provision is not designed as a safe harbor, because the rule requires the issuer to act within a reasonable time. But, by virtue of the deletion of the preclusion rule in the document examination article in UCP500, however, seven days may evolve as something of a safe harbor, especially for banks that engage in strategic behavior. True, under UCP500 banks are supposed to examine documents within a reasonable time, but there are no consequences in UCP500 for a bank's violation of that duty. It is only in the next provision. Courts might read the preclusion more broadly than the literal reading mentioned here or might fashion a common-law preclusion rule that does not require a showing of detriment. Absent that kind of development, the change in the preclusion rule could have adverse effects on the beneficiary. The penalty, strict estoppel or strict preclusion, under UCP500 and 95UCC differs from the classic estoppel. The classic estoppel rule requires a beneficiary to show three elements. 1. conduct on the part of the issuer that leads the beneficiary to believe that nonconforming documents do conform; 2. reasonable reliance by the beneficiary; and 3. detriment from that reliance. But stict preclusion rule needs not detrimental reliance. This strict estoppel rule is quite strict, and some see it as a fitting pro-beneficiary rule to counterbalance the usually pro-issuer rule of strict compliance.

• International Commerce and Information Review
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• v.14 no.2
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• pp.389-409
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• 2012

The Switched Bill of Lading(SBL) has been in frequent use in recent years as intermediary trade increases with the growing number of companies' overseas subsidiaries. Its frequent use, though, has brought about disputes regarding its illegal issue. Although there are several legal cases regarding this, studies on this issue are hard to find. Therefore, this study tries to provide countermeasures and precautions against unlawful issues of SBL through examining the legal cases resulting from illegal issuing practices of SBL. When the Switched Bill of Lading is issued, the shipper, consignee, port of loading and unloading, and shipping date of the original bill of lading are usually changed. Statements which may put the shipper at a disadvantageous position may also be deleted and/or the bill of lading may be either divided or integrated when it is issued. However, if the carrier issues the SBL 1)without withdrawing original BL, 2)indicating the shipping date, port of loading and port of discharge falsely, or 3)deleting the statements which may give him disadvantages, it may be regarded as an illegal issue. These unlawful issues of SBL may pose a huge threat to the shipper, banks and the parties relating to the trade. That is, the shipper may take a substantial loss when the goods can be delivered to a third party by SBL without his collecting the proceeds. The issuing bank and the negotiating bank may also have their security rights to the goods hampered by the illegal and improper issue of SBL. In most cases, the carrier has no choice but to issue the SBL without collecting the original BL for fear of hurting the relationship with the intermediary traders. This practice of issuing more than two sets of BL may pose a potential risk to the carrier.

• Journal of the Korea Institute of Information and Communication Engineering
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• v.25 no.3
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• pp.346-354
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• 2021

Since 2015, Blockchain has experienced rapid development throughout the world, institutions including Central Banks, Government Departments, Commercial Banks, IT Giants are all accelerating their exploration on Blockchain, and investment on Blockchain related R&D departments and start-up companies also shows explosive growth. This paper studies the impact of blockchain technology on banks' conventional trade settlement methods and describes blockchain technology in term of its concepts, advantages, and disadvantages. It also studies the application processes of blockchain technology combined with conventional trade settlement methods (remittance, collection, and L/C), and analyzes the positive and negative impacts of blockchain technology on the conventional trade settlement methods. In addition, this paper lists the blockchain application cases, analyzes the technology development status and existing problems, and puts forward suggestions and measures for the development of blockchain finance in China based on the case analysis and impact research.

• International Commerce and Information Review
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• v.8 no.4
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• pp.105-121
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• 2006

This study is related with the judgements of our country's supremcourt against the transaction of Letter of Credit which is beneficiary's fraudulent trade deal. In this case I think to analyse the judgements and to present the basic grounds on which the judgements were established. In Letter of Credit transaction, there are the major parties, such as, beneficiary, issuing bank, or confirming bank and the other parties such as applicant, negotiating bank, advising bank and paying bank. Therefore, in this cases, the beneficiary, the French Weapons' Supplier who did not shipped the commodities, created the false Bill of Lading, let his dealing bank make payment against the documents presented by him and received the proceeds from the negotiating bank or collecting bank, thereafter was bankrupted and escaped. For the first time, even though the issuing bank conceived that the presented documents were inconsistent with the terms of L/C. it did not received the payment approval from the applicant against all the discrepancies, made the negotiating bank pay the proceeds to exporter and thereafter, delivered the documents to the applicant long after the time of the issuing bank's examination of documents. The applicant who received the documents from the issuing bank, instantly did not examine the documents and inform to the issuing bank whether he accepted the documents or not. Long time after, applicant tried to clear the goods through custom when he knew the bill of ladings were false and founded out the documents had the other discrepancies which he did not approved. As the results, the applicant, Korea Army Transportation Command claimed, that the issuing bank must refund his paid amount because issuing bank examined the documents unreasonably according to u.c.p 500 Act 13th, 14th. In spite of the applicant's claim, the issuing bank argued that it paid the proceeds of L/C reasonably after receiving the applicant's approval of an discrepancy of document, the delayed shipment, but for concerning the other discrepancies, the trivial ones, the applicant did not examined the document and noticed the discrepancies in reasonable time. Therefore the applicant sued the issuing bank for refunding it's paid proceeds of L/C. Originally, this cases were risen between Korea Exchange Bank and Korea Army Transportation Command. As result of analysing the case, the contents of the case case have had same procedure actually, but the lower courts, the district and high courts all judged the issuing bank was reasonable and did not make an error. As analysing these supreme court's judgements, the problem is that whether there are the applicant's liability of examining the documents and informing its discrepancies to the issuing bank or not, and if the applicant broke such a liabilities, it lost the right of claiming the repayment from issuing bank. Finally to say, such applicant's liabilities only must be existed in case the documents arrived to the issuing bank was delivered to the applicant within the time of the documents examination according to u.c.p 500 Act 14, d. i. But if any the documents were delivered to applicant after time of the documents examination, the applicant had not such liabilities because eventhough after those time the applicant would have informed to the issuing bank the discrepancies of documents, the issuing bank couldn't receive repayment of its paid proceeds of document from the negotiating bank. In the result after time of issuing bank's examination of documents, it is considered that there's no actual benefit to ask the applicant practice it's liability. Therefore finally to say. I concluded that the Suprem Court's judgement was much more reasonable. In the following, the judgements of the supreme court would be analysed more concretely, the basic reasons of the results be explained and the way of protecting such L/C transaction would be presented.

• Korea Trade Review
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• v.48 no.4
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• pp.303-320
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• 2023

Recently, import and export companies have been using T/T remittance and Surrender B/L more frequently than L/C when selecting the process and method of trade payment settlement. The new trade and logistics environment is thriving in the era of the Fourth Industrial Revolution (4IR). Document-based trade transactions are undergoing a digitalization as bills of lading or smart contracts are being developed. The purpose of this study is to verify whether exporters choose export payment types based on negotiating factors. In addition, we would like to discuss the application of the characteristics of the new trade and logistics environment. Data for analysis was collected through surveys. The collection method consisted of direct visits to the company, e-mail, fax, and online surveys. The survey distribution period is from February 1, 2023, to April 30, 2023. The questionnaire was distributed in 2,000 copies, and 447 copies were collected. The final 336 copies were used for analysis, excluding 111 copies that were deemed inappropriate for the purpose of this study. The results of the study are shown below. First, among the negotiating factors, the product differentiation of exporters did not significantly affect the selection of export payment types. Second, among the negotiating factors, the greater the purchasing advantage recognized by exporters, the higher the possibility of using the post-transfer method. In addition to analyzing the results, this study suggests that exporters should consider adopting new payment methods, such as blockchain technology-based bills of lading and trade finance platforms, to adapt to the characteristics of the evolving trade and logistics environment. Therefore, exporters should continue to show interest in initiatives aimed at digitizing trade documents as a response to the challenges posed by bills of lading. In future studies, it is necessary to address the lack of social awareness in Korea by conducting advanced research abroad.