Letters of Credit and Contract of Sale: Autonomy and Fraud

Abstract

The paper deals with three topics: firstly, the fundamental feature of letters of credit transactions that the contracts relating to the letters of credit are autonomous and separate form the contract of sale; secondly, the effect of fraud on the substantive rights of the parties to the documentary credit transaction and availability of interlocutory (or interim) injunctions to prevent the bank from honouring the letter of credit or against the seller to restrain them from presenting documents to the bank to obtain payment; and thirdly whether the fraud exception is confined to fraud in the document or is extended to fraud in the underlying transactions between the buyer and seller.

Keywords Transactions, Contract, Letters of credit