“PART ONE: FOB SALES … 2. DELIVERY 2.1. The Product shall be delivered by the Seller to the Buyer in bulk Free on Board (FOB) to the Vessel to be provided or procured by the Buyer at the Loading Port designated by the Seller … 3. RISK AND TITLE 3.1. Risk and Title: Notwithstanding any right of the Seller to retain documents until payment is effectively made, title in the Product, and all risks and all liabilities with respect thereto shall pass to the Buyer when the Product passes the flange connection between the delivery hose of the Loading Port and the permanent hose connection of the Vessel at the Loading Terminal, at which point of delivery the Seller´s responsibility with respect to the Product shall cease and the Buyer shall assume all risk of loss or damage to, including but not limited to, deterioration or evaporation of the Product so delivered … 6. ARRIVAL OF VESSELS, LOADING BERTHING AND OTHERS … 6.2. Loading: Provided that the Vessel has arrived in accordance with section 6.1 and tendered a valid NOR, and unless otherwise agreed in writing by the Seller, the Seller shall be under no obligation to commence loading hereunder prior to 06:00 hours (local time) or the first operation hour of the Loading Terminal according to its own regulations or any other specifically agreed hour (whichever first occurs) on the first day of the Laydays … 7. LAYTIME AND DEMURRAGE … 7.2. Time allowed to the Seller for loading a full or part cargo shall be thirty-six (36) running hours, weather permitting, Sundays and holidays included unless loading on the Sunday or holiday in question is prohibited by Law or Regulation at the Loading Port … 7.14. Notwithstanding the foregoing provisions, the Seller shall not be liable for Demurrage hereunder unless the Seller is notified in writing of the claim within forty-five (45) calendar days from the date of the Bill of Lading and the fully documented claim is received by the Seller within ninety (90) calendar days from the date of the Bill of Lading. If the Buyer fails to comply with the above, all claims regarding Demurrage shall be deemed to have been waived by the Buyer and they shall be absolutely and finally time barred as a result and no claim may be brought in respect of them … 7.17. The Seller shall not be liable (other than for Demurrage, as specified herein) for any loss or damage, direct or indirect, which the Buyer may suffer as a result of the shipment not being loaded within the time allowed. The sole remedy for delay of the Vessel available to the Buyer will be Demurrage according to this section 7, and damages for detention are expressly excluded … PART FIVE - GENERAL PROVISIONS APPLICABLE TO ALL SALES … 27. DEFINITIONS The following words shall have the following meaning except when the context otherwise requires: … (j) Charter Party: means the contract of affreightment of the Vessel … (t) Laytime and Demurrage: mean, respectively, the time agreed between the Parties or set forth in these Cepsa Trading 2021 GT&C’s during which the Vessel will be available for loading or discharging without payment of demurrage, and the agreed amount payable to the Vessel in respect of non-permitted or excepted delay beyond the Laytime … 33. PAYMENT 33.1. Unless otherwise agreed to by the Seller and the Buyer in the Sales Contract, payment shall be made by means of an irrevocable Documentary Letter of Credit or Stand-by Letter of Credit opened or confirmed by a First-class international bank approved by the Seller, in the form set out, as applicable, in Annex A or Annex B. 33.3. Payment shall be made in full in US Dollars, or in any other agreed currency, without discount, deduction, withholding, offset or counterclaim against presentation, at or before the payment date defined in each Sales Contract, of the commercial invoice together with documents referred to in Annex A or Annex B, or, in their absence, together with the Seller´s Letter of Indemnity (LOI) set out in Annex C. For both, the Seller’s digital commercial invoice and digital LOI shall be acceptable. … 33.6. The Letter of Credit shall take effect in accordance with its terms, but such terms shall not alter, add or in any way affect the terms of the Agreement, or any of them. If the Buyer does not provide the Letter of Credit on or before the third (3rd) Business Day prior to the first day of the agreed Laydays, or, in the case of CIF / CFR with Indicative Discharge Dates, on the third (3rd) Business Day prior to loading, the Seller may immediately terminate the Sales Contract forthwith without prejudice to any rights and/or remedies that the Seller may have. In no event shall the Seller be obliged to commence or complete loading until six (6) hours after the said Letter of Credit is opened and notified in writing to Seller by the opening or advising bank, as applicable, including the complete wording in a form acceptable to Seller, such acceptance shall not be unreasonably withheld. Any delay, costs and damages whatsoever arising from the failure of the Buyer to open the Letter of Credit as provided for shall be for the Buyer´s account. 33.7. If for any reason the Buyer does not comply with the terms of payment contained in this section 33 or any other payment provisions substituted for this section 33 duly agreed by the Parties, then, and without prejudice to the rights of the Seller to receive payment under this section 33 or otherwise, title, but not risk to the Product shall remain vested in the Buyer, and the Seller shall have a right of lien to the Product delivered until the Buyer has fulfilled its obligations hereunder. In the event that the Product has been commingled with other Products on board the Vessel, the Seller shall have the right of lien to such part of commingled Product as corresponds to the Quantity and Quality of the Product delivered under the Sales Contract. In addition the Buyer undertakes at its own cost to order the discharge of the Vessel exclusively to a party notified by the Seller to the Buyer; and in all cases, the Seller may at any time by notice to the Buyer, without prejudice to any other legal remedies the Seller may have and without any liability whatsoever for any cost, loss or damage (including liabilities to third parties) incurred by the Buyer, forthwith cancel delivery of all or any shipments or withhold delivery of the Product under the Agreement and/or release of shipping documents or LOI. 33.8. If for any reason whatsoever the Buyer fails to make any payment due to the Seller under this Agreement on or before the due date for payment, then, without limiting the Seller’s remedies under any termination right or clause, interest shall accrue on the overdue amount at the rate of 3% per annum above one month LIBOR (the London Interbank Offered Rate Administered by Ice Benchmark Administration Limited (or any other person which takes over the administration of that rate)) currency and period displayed on pages Libor01 or Libor02 of the Reuters screen (or any replacement Reuters page which displays that rate)) from time to time. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount to the Seller, whether before or after judgment, and will be immediately payable by the Buyer on demand by the Seller. If such rate or page ceases to be available, the Seller will notify the Buyer of the applicable rate or page as per market standard practice. 33.9. Payment Documents: Save otherwise agreed in the Sales Contract the Seller will only be obliged to produce the following documents to receive payment: 33.9.1. In the case of FOB, CFR or CIF deliveries by Vessel: (a) the Seller’s digital copy of the commercial invoice; and (b) three (3) original Bills of Lading issued or endorsed to the order of the Buyer; and (c) original or digital copy, as available, of the certificate/s of Quantity, Quality and origin (or equivalent documents issued at the Loading Terminal). In case that the documents defined in (b) and (c) are not available for presentation to the Buyer on or before the payment due date, the Buyer agrees to pay the Seller upon presentation to the Buyer of a LOI as per Annex C … 39. LIABILITY AND LIMITATIONS AND EXCLUSIONS OF LIABILITY … 39.3. The Seller shall not be liable for consequential, indirect or special losses/damages of any kind arising out of or in any way connected with the conclusion, the performance, the failure to perform or the termination of the Sales Contract. In particular and without limiting the generality of the foregoing, the Seller shall in no circumstances be liable for more than the difference between the market price and the contract price with respect to the relevant Quantity of Product, nor be liable for any loss of profit, cost of overheads thrown away or loss resulting from shutdown of any plant of the Buyer due to the lack of Product … ANNEX A – DOCUMENTARY LETTER OF CREDIT FORMAT Format of Irrevocable Documentary Letter of Credit as required: Please urgently advise [FULL NAME OF SELLER], [ADDRESS], that we [BANK] hereby issue our irrevocable documentary letter of credit number [LC NUMBER], in their favour for account of [FULL NAME OF BUYER], [ADDRESS] for an amount of USD [US DOLLAR AMOUNT] (say [US DOLLAR AMOUNT IN WORDS]) +/-XX% available at our counters [DAYS] days [FROM/AFTER] [PAYMENT TERMS] against presentation of the following documents in one original and [NUMBER OF] copies unless otherwise stated: 1. One or more signed commercial (Provisional/Final) invoices. 2. [in the case of FOB/CFR/CIF delivery] one or more full sets of 3/3 original clean on-board ocean bills of lading issued or endorsed to the order of THE APPLICANT. 3. [in the case of Ex Tank, Into Tank, In Situ delivery] copy of the transfer certificate. 4. [in the case of FOB/CFR/CIF and Ex Tank, Into Tank, In Situ delivery] certificates of quality. 5. [in the case of FOB/CFR/CIF delivery] certificates of quantity. 6. certificates of origin 7. [in the case of CIF delivery]: insurance certificate covering 110% of the cargo value 8. [in the case of DES/DAP/DAT/DPU] original or digital copy, as available, of the certificates of quantity and quality. [In the case of delivery FOB/CFR/CIF only]: In the event that the above documents are unavailable at the time of presentation, payment will be made against document number one above (the Invoice) and a Letter of Indemnity issued by beneficiary as per Annex C …”
“DEMURRAGE PAYABLE EVERY 7 DAYS AS INCURRED, AGAINST ELECTRONIC INVOICE AND ALWAYS BBB - ALL LOADPORT DEMURRAGE PAYABLE TOGETHER WITH FREIGHT BBB … DEMURRAGE: USD 24,000 PDPR LAYTIME: 48HRS LOAD PORT / 96HRS DISCH PORT SHINC REV …”
“FULL SET OF CLEAN ON-BOARD DELIVERING VESSEL BILLS OF LADING IN 03 ORIGINALS AND 03 NON-NEGOTIABLE COPIES ISSUED OR ENDORSED TO THE ORDER OF SIERRA LEONE COMMERCIAL BANK LTD MARKED FREIGHT PAYABLE AS PER CHARTER PARTY 3 ORIGINAL SIGNED & STAMPED CERTIFICATES OF QUANTITY WRITTEN IN ENGLISH ISSUED BY INDEPENDENT INSPECTORS (SGS) 3 ORIGINAL SIGNED & STAMPED CERTIFICATES OF QUALITY WRITTEN IN ENGLISH, THESE CERTIFICATES MUST BE NAMED AS “CERTIFICATE OF QUALITY”, NOT “CERTIFICATE OF ANALYSIS”
“The court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if - (a) it considers that the party has no real prospect of succeeding on the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.”
“In deciding whether to give permission for an admission to be withdrawn, the court shall consider all the circumstances of the case, including - (a) the grounds for seeking to withdraw the admission; (b) whether there is new evidence that was not available when the admission was made; (c) the conduct of the parties; (d) any prejudice to any person if the admission is withdrawn or not permitted to be withdrawn; (e) what stage the proceedings have reached; in particular, whether a date or period has been fixed for the trial; (f) the prospects of success of the claim or of the part of it to which the admission relates; and (g) the interests of the administration of justice.”
“Now, should the bank have paid? It may be they were justified in not paying, and the answer to that question is “probably not,” although I do not think it is certain they should not; but both buyers should, in my judgment, without hesitation have had the matter put right. The plaintiffs had fulfilled their obligations, and that was quite clear to the minds of the defendants, and they should have made it quite clear to the minds of the third parties who were buying from them, and the third parties themselves should have appreciated their true position.”
“… I think the conclusion which must be reached in this case is that the property passed, and I therefore find that the plaintiffs are entitled to claim the price on the basis that the property passed. That gives rise to a consideration of a further point which was taken and which is, perhaps, the most difficult point in the case. The action is against the buyer, not against the bank, and the question of importance is whether the seller must look only to the bank who issued the letter of credit; that is, whether the method of payment agreed releases the buyer from direct liability for payment under the contract of sale. There does not seem to be any definite authority on the matter. Where it has been agreed that payment is to be by a bill of exchange, the payment would normally be a conditional payment and it would require very clear terms to make it an absolute payment. Here, payment was to be by a draft drawn on the bank issuing the credit and it was, therefore, to be made by a negotiable instrument. Originally the payment of the price was to be guaranteed by a bank and the letter of credit was only taken subsequently in substitution at the request of the defendants and with the agreement of the plaintiffs. I do not think there is any evidence to establish, or any inference to be drawn, that the draft under the letter of credit was to be taken in absolute payment. I see no reason why the plaintiffs, in the circumstances which have so unfortunately and unnecessarily arisen, should not look to the defendants, as buyers, for payment.”
“Final payment of any balance under this credit due and allowable to seller after final determination of weight and analysis to be available by seller’s final invoice and a cable from buyer confirming the amount of final payment”
“The general question whether a seller who stipulates for or agrees to payment by letter of credit can enforce payment directly against the buyer in the event of payment not being received out of the letter of credit is one which has been raised but not decided. In a book by Dr. A.G. Davis, The Law Relating to Commercial Letters of Credit, 2nd ed. (1954), p. 42, the question is stated in these terms: “A question of much greater importance so far as the relationship between the buyer and the seller is concerned is whether the seller, by demanding ‘payment by bankers’ credit’, agrees thereby to release the buyer from liability for payment under the sales contract; whether, in other words, the seller agrees to take the letter of credit as absolute payment or whether it constitutes conditional payment only.”
“On behalf of the buyers it was submitted that the express term in the contract … defines the contractual method of payment by buyers and the contractual method of performance by the sellers by which initially payment is to be obtained subject, of course, to the buyers’ right to reject the goods themselves if not in conformity with the contract and that, whereas in a normal c.i.f. or c. & f. contract providing for payment cash against documents, the shipping documents must be tendered to the buyers, under this form of contract the tender of documents has to be made to the bank by whom the credit has been opened or, in the case of a confirmed credit, to the bank by whom the credit has been confirmed, and that such tender of documents is the only manner in which the sellers can obtain payment. Such a conclusion, as it seems to me, is of mutual advantage to both parties - of advantage to the seller in that by the terms of the contract he is given what has been called in the authorities a “reliable paymaster” generally in his own country whom he can sue, and of advantage to the buyer in that he can make arrangements with his bankers for the provision of the necessary funds, his banker retaining the drafts and the documents as his security for making payment to the seller and the buyer being freed from the necessity of having to keep funds available to make payment against presentation of documents to him at an uncertain time which is no further defined in the authorities than being at a reasonable time after shipment by the seller of documents covering goods which he has shipped or which are already afloat. Although in the classic statements as to the duties of the respective parties such as is to be found in Ireland and Others v. Livingston, (1872) L.R. 5 H.L. 395, and Biddell v. E. Clemens Horst Company, [1911] 1 K.B. 214, reference is made to the duty of the sellers to tender to the buyers the shipping documents in exchange for payment by the buyers, in a case like the present, in which by the express terms of the contract payment is to be made against letters of credit, as it seems to me the general principle stated in those cases must be controlled by the express words of the contract. Under this form of contract, as it seems to me, the buyer performs his obligation as to payment if he provides for the sellers a reliable and solvent paymaster from whom he can obtain payment - if necessary by suit - although it may well be that if the banker fails to pay by reason of his insolvency the buyer would be liable; but in such a case, as at present advised, I think that the basis of the liability must in principle be his failure to provide a proper letter of credit which involves (inter alia) that the obligee under the letter of credit is financially solvent. (This point as to the buyers’ liability for the insolvency of the bank was not fully argued before me and I prefer to express no concluded opinion upon it as I understand that it may arise for decision in other cases pending in this Court.) It seems to me to be quite inconsistent with the express terms of a contract such as this to hold that the sellers have an alternative right to obtain payment from the buyers by presenting the documents direct to the buyers. Assuming that a letter of credit has been opened by the buyer for the opening of which the buyer would normally be required to provide the bank either with cash or some form of authority, could the seller at his option disregard the contractual letter of credit and present the documents direct to the buyer? As it seems to me, the answer must plainly be in the negative.”
“by confirmed irrevocable letter of credit to be opened at sight one month prior to shipment ...”
“… before the Kenyan sellers presented the documents for the second shipment to the confirming bank sterling was devalued. The Kenyan sellers then presented the documents to the confirming bank and obtained payment in sterling in accordance with the credit. Now they claim to be entitled to more. They say that they were and are entitled to have the price measured in Kenyan currency: that the proceeds of the credit go in reduction of that price: but do not discharge it altogether: and that they are entitled to the balance. The effect of a letter of credit When an irrevocable letter of credit is issued by one bank and confirmed by another, it may be a “conforming” credit; that is, one which conforms exactly to the contract of sale: or it may be a “non-conforming” credit; that is, one which does not conform exactly to the contract of sale, but is afterwards modified or accepted as being satisfactory to all concerned. It then becomes equivalent to a “conforming credit.”
“a provision for payment by irrevocable and confirmed letter of credit ... might perhaps not unreasonably be regarded as a stipulation for the liability of the confirming bank in place of that of the buyer.” and in Soproma S.p.A. v. Marine & Animal By-Products Corporation [1966] 1 Lloyd's Rep. 367, 385, McNair J. said: “Under this form of contract, as it seems to me, the buyer performs his obligation as to payment if he provides for the sellers a reliable and solvent paymaster. ...”
“the authorities favour the view that there is no presumption that the seller takes a draft drawn under a letter of credit in absolute payment of the buyer's obligation to pay for the merchandise; hence upon default by the bank upon its draft the seller may look to the buyer.”
“I do not think there is any evidence to establish, or any inference to be drawn, that the draft under the letter of credit was to be taken in absolute payment. I see no reason why the plaintiffs ... should not look to the defendants, as buyers, for payment.”
“such authority as there is tends to support the view that the letter of credit constitutes conditional, and not absolute, payment. Therefore, should the issuing banker fail to honour the seller’s drafts, drawn in conformity with the terms of the credit, the rights of the seller against the buyer will revive”: see The Law Relating to Commercial Letters of Credit, 2nd ed. (1954), p. 46; 3rd ed. (1963), p. 49, Megrah in H. C. Gutteridge’s Law of Bankers’ Commercial Credits, 4th ed. (1968), pp. 29-33 and Paget on The Laws of Banking, 7th ed. (1966), pp. 620-622 is to the same effect. No payment at all If the letter of credit is no payment at all, but only a means by which payment may be obtained, i.e., if it is only collateral security, the consequences are these: the seller ought to present the documents to the banker. If the seller does not do so, he will be guilty of laches in enforcing his security and the buyer will be discharged: see Peacock v. Pursell (1863) 14 C.B.N.S. 728. But if on the presentation the banker fails or refuses to take up the documents, then (if the letter of credit is only collateral security) the seller will be entitled to take the documents round to the buyer (or send them to him) and demand that he takes them up and pay the price. This situation finds no place in any of the authorities. There is a statement in an old case in Pennsylvania, Bell v. Moss (1839) 5 Whart. 189, 203, when it was said: “A credit with a banker is not payment, but a means of payment, more or less secure according to the solidity of the depositary; and the greater or less certainty of the security cannot affect the question of its character: it is but a security still.”
“It seems to me to be quite inconsistent with the express terms of a contract such as this to hold that the sellers have an alternative right to obtain payment from the buyers by presenting the documents direct to the buyers. Assuming that a letter of credit has been opened by the buyer for the opening of which the buyer would normally be required to provide the bank either with cash or some form of authority, could the seller at his option disregard the contractual letter of credit and present the documents direct to the buyer? As it seems to me, the answer be plainly in the negative.”
“The contract of sale provided for payment by “confirmed, irrevocable letter of credit to be opened at sight one month prior to shipment as stipulated in this contract.”
“Mr. Evans sought to submit as a proposition of law, that where the identity of the bank is agreed between the parties, and not left to the choice of the buyers, it must follow that the sellers impliedly agree that the liability of the issuing bank has been accepted by them in place of that of the buyers. I do not think that this is correct. The fact that the sellers have agreed on the identity of the issuing bank is but one of the factors to be taken into account when considering whether there are circumstances from which it can be properly inferred that the sellers look to that particular bank to the exclusion of the buyer. It is in no way conclusive. In this case, unlike the United States case of Ornstein v. Hickerson referred to by Lord Denning, M. R. [in WJ Alan & Co v El Nasr Export], which was the basis of Mr. Evans’s submission, there were other circumstances which clearly supported the presumption that the letters of credit were not given as absolute payment but as conditional payment. It follows from the finding that the letters of credit were given only as conditional payment, that if they were not honoured, the respondents’ [the buyers’] debt has not been discharged. This is because the buyers promised to pay by letter of credit, not to provide by a letter of credit the source of payment which did not pay. See W.J. Alan & Co. v. [El] Nasr Export, [1972] 1 Lloyd's Rep. 313 per Lord Justice Stephenson at p.329. The sellers’ remedy in such circumstances is to claim from the buyers either the price agreed in the contract of sale or damages for breach of their contractual promise to pay by letter of credit … In order to support his submission that the conduct of the claimants and Merchant Swiss Ltd., referred to above, resulted in a discharge of the respondents’ obligation to pay the price of the goods, Mr. Evans was obliged to rely heavily upon the proposition that the respondents were in the position of guarantors of Merchant Swiss’s limited liability and that the letters of credit had the essential characteristics of a bill of exchange and were to be treated as such. On this basis he invoked the well-known lines of authority relating to the discharge of the guarantor's liability when indulgence is shown to the principal debtor and the need to give notice of dishonour prior to enforcing a bill of exchange. There is in my judgment no justification for so treating the respondents or the letters of credit. The respondents’ liability to the sellers was a primary liability. This liability was suspended during the period available to the issuing bank to honour the drafts and was activated when the issuing bank failed. The respondents were in no respect guarantors of Merchant Swiss Ltd. Further, the suggestion that the letters of credit should be treated as possessing all the main characteristics of a bill of exchange, seems to be derived from the fact that its position was described in the W.J. Alan & Co. v. [El]. Nasr case as being analogous to a bill of exchange, which is presumed when given under a contract of sale, to be given not as absolute payment but conditional payment. The existence of this analogy does not to my mind provide any warrant for treating letters of credit in the manner suggested. I therefore see no justification either in law or in fact for holding that the conduct of the claimants and Merchant Swiss Ltd. discharged the buyers' primary liability to pay the purchase price of the goods.”
“Is there a general principle of law that whenever a method of payment is adopted which involves a risk of non-payment by a third party there is a presumption that the acceptance of payment through a third party is conditional on the third party making the payment, and that if he does not pay the original obligation of the purchaser remains?”
“4. Is there a general presumption of conditional payment? Mr. Potts’ argument is founded on the law applicable to cheques, bills of exchange and letters of credit. It is common ground that where a debt is “paid” by cheque or bill of exchange, there is a presumption that such payment is conditional on the cheque or bill being honoured. If it is not honoured, the condition is not satisfied and the liability of the purchaser to pay the price remains. Such presumption can be rebutted by showing an express or implied intention that the cheque or bill is taken in total satisfaction of the liability: see Chitty on Contracts, 25th ed. (1983), vol. 1, pp. 800-802, paras. 1436 et seq.; Sayer v. Wagstaff (1844) 14 L.J.Ch. 116; In re London, Birmingham and South Staffordshire Banking Co. Ltd. (1865) 34 Beav. 332; In re Romer & Haslam [1893] 2 Q.B. 286; Allen v. Royal Bank of Canada (1925) 95 L.J.P.C. 17 and Bolt & Nut Co. (Tipton) Ltd. v. Rowlands Nicholls & Co. Ltd. [1964] 2 Q.B. 10. There is a similar presumption applicable to payments made by means of letters of credit. If the seller does not receive payment under the letter of credit, it is presumed that the buyer is still liable to pay the price although this presumption can be rebutted by express or implied agreement to the contrary: see W. J. Alan & Co. Ltd. v. El Nasr Export and Import Co. [1972] 2 Q.B. 189, 212B, per Lord Denning M.R. and, at p. 221E, per Stephenson L.J.; Maran Road Saw Mill v. Austin Taylor & Co. Ltd. [1975] 1 Lloyd's Rep. 156 and E. D. & F. Man Ltd. v. Nigerian Sweets & Confectionery Co. Ltd. [1977] 2 Lloyd's Rep. 50 . Like the judge (see[1987] Ch. 150 , 166A), I cannot detect from the authorities any such general principle as Mr. Potts suggests which is applicable to all cases where payment is to be effected through a third party. The cases on cheques and bills of exchange do not contain any reference to such a principle. They are all cases where there was an obligation to pay a sum of money which predated the tendering of the cheque. The principle applied is that the obligation to discharge the pre-existing debt has not been satisfied unless the creditor has expressly or impliedly agreed to accept the cheque or bill in final satisfaction. When a similar rule was applied to letters of credit in W. J. Alan & Co. Ltd. v. El Nasr Export and Import Co. [1972] 2 Q.B. 189, Lord Denning M.R., with whom Stephenson L.J. agreed, did not treat the matter as decided by any existing general principle of law. He described the question as one of construction to be determined in the light of the consequences: see p. 209D. He then considered the consequences of treating a letter of credit as being an absolute or a conditional payment in the light of the circumstances affecting the type of commercial transaction in which letters of credit are used. He reached the conclusion that in those circumstances payment by letters of credit should be treated as conditional. Although he referred to the position as being analogous to that applicable to cheques and bills of exchange, he did not treat those cases as establishing any such general principle as Mr. Potts relies on. In my judgment, there is no such general principle. Each method of payment has to be considered in the light of the consequences and other circumstances attending that type of payment. When, as with credit cards, a new form of payment is introduced applicable to new sets of circumstances, it is necessary to consider whether such payment should be treated as absolute or conditional in the light of the consequences and circumstances of such new type of payment, not according to any general principle.”
“Once the buyer has procured the opening of a documentary credit in accordance with the terms of the underlying contract, the seller is not entitled to bypass the credit and seek payment directly from the buyer. A documentary credit affords the seller the reassurance of being able to look to one or more banks as, it assumes, reliable and solvent paymasters. In return, the buyer is relieved from having to stand ready to pay the seller upon tender of documents and instead can agree reimbursement arrangements with the issuing bank suitable to the seller’s financial position. The seller’s right to look to the banks is not, therefore, a mere option: an alternative right to elect to present documents directly to, and call for payment from, the buyer would deny the buyer its correlative right to organise its financial affairs with the issuing bank to its own convenience.”
“In the event of credit failure, the seller’s position against the buyer then depends on the underlying contract. The opening of the credit may constitute “conditional payment”, in the sense that the seller agrees to look to the credit for payment on condition that it functions properly. Credit failure then permits the seller to tender the documents to, and require payment from, the buyer. Alternatively, the opening of the credit may amount to “absolute payment”, meaning that the seller accepts its rights under the credit in discharge of the buyer’s payment obligations under the underlying contract. The seller agrees to look to the banks to the exclusion of the buyer; it accepts that, in the event of credit failure, its remedies will lie against the banks alone, and it thereby assumes the risk of bank insolvency. The precise role of the opening of a credit in the effecting of payment on the underlying contract is ultimately a matter of interpretation of that contract. Nevertheless, reflecting the extreme unlikelihood that a seller will agree to forfeit the protection otherwise afforded an unpaid seller and accept the risk of having to deliver goods in return for an unsecured claim against an insolvent bank, there is a presumption in favour of interpretation as conditional payment. Given that the purpose of a documentary credit is to facilitate the underlying transaction by providing the seller with assurance of payment, it would indeed be paradoxical if credit failure could place the seller in a worse position than it would be in had no credit been established in the first place. The courts have, accordingly, construed a requirement in an international sales contract for “payment” by documentary credit as importing a promise indeed to effect payment by means of a documentary credit and not simply a promise to establish a possible source of payment that may or may not pay. Moreover, it remains unclear, in the absence of unequivocal wording, under what circumstances, if any, the underlying contract would ever be construed as requiring merely the establishing of a documentary credit. Stipulation by the seller for a particular issuing or confirming bank might be an indicative factor, but the better view is that it is insufficient of itself. Other factors must demonstrate not merely a preference on the part of the seller for a particular bank but an intention of the parties that the seller be required to look for payment to that particular bank “to the exclusion of the buyer”
“Failure to make a complying presentation constitutes a repudiatory breach of the underlying sale contract. Where a contract provides for payment by documentary credit, the opening of the required credit almost invariably constitutes only conditional payment but the condition relates to the operation of the credit according to its terms, not to the receipt by the seller of payment despite a failure to comply with the credit’s terms and conditions. A seller that fails to make a complying presentation has no right to require payment instead from the buyer. The consequence is to characterise every instance of non-compliance under a documentary credit, subject to re-presentation, as a repudiatory breach of the underlying contract, irrespective of whether the tender of such documents to the buyer would constitute a repudiatory breach in the absence of any documentary credit.”
“This case raises a novel problem. If an f.o.b. seller who has contracted for payment under a letter of credit to be opened by the buyer ships the goods but fails to obtain payment under the credit because of a failure on his part to comply with its terms, may he recover the contract price or damages for non-acceptance against the buyer? The bank which opened the relevant credit is not a party to the action and no claim is made against it. The plaintiffs accept that the documents which they presented under the credit contained discrepancies and that the bank was entitled to refuse payment.”
“The sellers’ central contention is that a letter of credit is conditional payment only. If, therefore, a seller duly ships the goods and fails to obtain payment under the letter of credit he is entitled to recover the price directly from the buyer, at any rate once the letter of credit has expired … Reliance was placed on W. J. Alan & Co Ltd v. El Nasr Export and Import Co., [1972] 1 Lloyd’s Rep. 313; [1972] 2 Q.B. 189, particularly on the judgment of Lord Denning M.R., and on E. D. & F. Man Ltd v Nigerian Sweets & Confectionery Co Ltd., [1977] 2 Lloyd’s Rep. 50. The buyers agree that a letter of credit is conditional payment only, but contend that it is under the parties’ contract the sole method of payment agreed. While it may well be open to a seller to claim against the buyer if the agreed method of payment fails through no fault of the seller, this is not so where the failure to obtain payment results from the seller’s failure to operate the prescribed machinery in the agreed manner … Reliance was also placed on the Alan case, particularly on the judgment of Lord Justice Megaw, and on Ficom S.A. v Sociedad Cadex Limitada,[1980] 2 Lloyd’s Rep 118 . On the facts as I have summarized them the authorities in my judgment lead to the following conclusions: … 5. The parties are right to agree in the present case that the letter of credit is, on Lord Denning’s classification in Alan, conditional payment. The sellers never agreed that they would only look to Oriental Credit for payment whatever happened. Nor is the credit to be regarded as no payment at all but only a means by which payment may be obtained, a form of collateral security. But to speak of a letter of credit as conditional payment of the price does not perhaps make very clear what the condition is or how it works. If the buyer establishes a credit which conforms or is to be treated as conforming with the sale contract, he has performed his part of the bargain so far. If the credit is honoured according to its terms, the buyer is discharged even though the credit terms differ from the contract terms: that was the Alan case. If the credit is not honoured according to its terms because the bank fails to pay, the buyer is not discharged because the condition has not been fulfilled: that was the Nigerian Sweets case. This makes good sense: … For the buyers promised to pay by letter of credit, not to provide by a letter of credit a source of payment which did not pay [as Lord Justice Stephenson put it in the Alan case at pp. 329 and 220G.] If the seller fails to obtain payment because he does not and cannot present the documents which the terms of the credit, supplementing the terms of the contract, require, the buyer is discharged: that was the Ficom case. In the ordinary case, therefore, of which the present is an example, the due establishment of the letter of credit fulfils the buyer’s payment obligation unless the bank which opens the credit fails for any reason to make payment in accordance with the credit terms against documents duly presented. I know of no case where a seller who has failed to obtain payment under a credit because of failure on his part to comply with its terms has succeeded in recovering against a buyer personally. If this were an available road to recovery, many of the familiar arguments about discrepancies in documents would be unnecessary. Bearing in mind the likelihood that buyers will (as here) sell on to sub-buyers, such a result would, I think, throw the course of international trade into some confusion. It must in my view follow that the sellers here, not having complied with the credit terms, cannot recover against the buyers personally.”
“Where, under a contract of sale, the property in the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods.”
“3.1. Risk and Title: Notwithstanding any right of the Seller to retain documents until payment is effectively made, title in the Product, and all risks and all liabilities with respect thereto shall pass to the Buyer when the Product passes … 33.3. Payment shall be made in full in US Dollars, or in any other agreed currency, without discount, deduction, withholding, offset or counterclaim against presentation, at or before the payment date defined in each Sales Contract, of the commercial invoice together with documents referred to in Annex A or Annex B, or, in their absence, together with the Seller´s Letter of Indemnity (LOI) set out in Annex C. For both, the Seller’s digital commercial invoice and digital LOI shall be acceptable. … 33.9. Payment Documents: Save otherwise agreed in the Sales Contract the Seller will only be obliged to produce the following documents to receive payment: [there follows a description of the requisite documents] …”
“If the court is satisfied that— (a) there are special circumstances which render it inexpedient to enforce the judgment or order; or (b) the applicant is unable from any reason to pay the money, then, notwithstanding anything in paragraph (5) or (6), the court may by order stay the execution of the judgment or order, either absolutely or for such period and subject to such conditions as the court thinks fit.”
“37. The purpose of a no set-off or no counterclaim clause is to ensure immediate payment without having to wait for potentially protracted litigation on any cross claim of any kind … 38. That leaves, finally, the question of whether the matters that are asserted in the counterclaim might form grounds for a stay of execution, or, as it might be put, whether they fall within the second limb of part 24.2 as providing a compelling reason why the matter should be allowed to go [to] trial. In my view, they do not form any basis of a stay of execution and do not form a compelling reason for requiring the claimant’s claim to go to trial, for reasons made clear in a number of cases … The court will usually give effect to the bargain made by the parties and enforce a no set off clause, without permitting a stay of execution, although the court retains a discretion to grant a stay. A strong reason for doing so needs to be shown because it involves overriding the parties’ bargain, and this is likely to require proof of exceptional circumstances. There are no such exceptional circumstances in this case.”
“5. Vessel, Laytime & Demurrage: … Laytime: As per sections 7, 15 and 22 of the Cepsa Trading 2021 GT&C’s (as applicable under the governing Incoterm). 5.3. Demurrage rate: As per Charter Party’s rate. 5.4. Demurrage other terms, conditions and exceptions: - Terms, exceptions and conditions as per GTC´S. - In case of T/C vessel, demurrage rate to be agreed upon vessel nomination as per market conditions …” - Terms, exceptions and conditions as per GTC´S. - In case of T/C vessel, demurrage rate to be agreed upon vessel nomination as per market conditions …”