If the exporter fails to ship the goods due to a force majeure event, can the importer still claim liquidated damages for the non-shipment? This is a question that occasionally arises in letter of credit practice. The answer lies in distinguishing the bank’s obligations under the LC from the parties’ rights and obligations under the underlying sale contract. Let’s look …

A reader recently asked whether a confirming bank typically requires an issuing bank to incorporate protective clauses into a documentary credit before agreeing to add its confirmation. The question focused on clauses relating to sanctions compliance, force majeure, fraud or illegality, and country and transfer risk. This is an interesting practical question because, in international banking practice, confirming banks generally …

An Analysis of Article 36 UCP 600 from a Real-Life Disaster Mr. Old Man _____ In international trade, the letter of credit (L/C) is often regarded as the “backbone” of transactions because of its ability to safeguard the interests of both the seller and the issuing bank. However, in practice, things do not always run smoothly. When the issuing bank …

QUESTION Dear Mr. Old Man, We hope my email finds you well. I need your assistance. If the issuing bank closed for the causes mentioned in article 36 but LC was available and expired at the counter of the beneficiary’s bank’s country, and that bank honored or negotiated complying documents, can the issuing bank honor these documents irrespective of that …

Picture obtained from South China Morning Post CORONAVIRUS AND FORCE MAJEURE Trade Services Update magazine is currently hosting a debate on force majeure in connection with the outbreak of coronavirus pneumonia in Wuhan. The situation is as follows: An L/C provides for payment at the nominated bank (NB) against complying documents. The NB is required to forward the documents to …