CAN A SELLER TERMINATE IF A LETTER OF CREDIT IS NOT OPENED ON TIME?

On 1st June, HFW published a briefing about a recent UK case, saying that in a recent arbitration decision (which HFW describes as “questionable”) a tribunal rejected the general principle that the obligation on a buyer under a sale contract to open a letter of credit is a condition entitling the seller to terminate if breached.  The briefing points out that, generally, an obligation on a buyer to open a letter of credit in accordance with the contract is a condition which, if not performed in time, allows the seller to terminate the contract and claim damages. The decision (although not binding on other tribunals) suggests that there is uncertainty as to when a contractual requirement to open a letter of credit will be a condition entitling the seller to terminate if it is not met or an intermediate term.  Further, if it is an intermediate term, it is not clear at what point (and how far from the shipment period) a seller would be entitled to terminate if the letter of credit is not opened.

http://www.hfw.com/Not-by-the-letter-Can-a-seller-terminate-if-a-letter-of-credit-is-not-opened-on-time-June-2018

 

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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