Narrow Fishing and Trading Company Vrs Quansah and Others [2006] GHACA 8 (19 July 2006)

Narrow Fishing and Trading Company Vrs Quansah and Others [2006] GHACA 8 (19 July 2006)

The appellant bank was liable for breach of duty in failing to ensure strict compliance with the letter of credit terms, accepting discrepant documents, and making payment after the expiry of the L/C. The doctrine of strict compliance applies under UCP 500, and the appellant could not rely on the Article 18 disclaimer as it was neither brought to the respondent's notice nor accepted. The agency relationship between the issuing and correspondent banks made the appellant responsible for the correspondent bank's actions.

Citation
Narrow Fishing and Trading Company Vrs Quansah and Others [2006] GHACA 8 (19 July 2006)
Parties
Plaintiff/respondent: Narrow Fishing & Trading Company; 1st Defendant: James Richard Quansah; 2nd Defendant: Saviour Woodworks Ltd.; 3rd Defendant/appellant: National Investment Bank Ltd.
Court
ghaca
Jurisdiction
Ghana
Judgment Date
19 July 2006
Procedural Posture
Civil Appeal / Judgment on Appeal
Outcome
appeal dismissed
Legal Topics
Letters of Credit, Documentary Credits, Bank Liability, Agency, Strict Compliance, Discrepancies in Shipping Documents, Contractual Obligations
Source Language
eng
Banking Law Commercial Law Contract Law Letters of Credit Documentary Credits Bank Liability Agency Strict Compliance +2 more

Case Brief

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Parties

Narrow Fishing & Trading Company

Plaintiff/respondent

James Richard Quansah

1st Defendant

Saviour Woodworks Ltd.

2nd Defendant

National Investment Bank Ltd.

3rd Defendant/appellant

Procedural Posture

Civil Appeal / Judgment on Appeal

Legal Issues

  1. 1 Whether the appellant bank was liable for payment under a letter of credit despite discrepancies in shipping documents and after expiry of the credit.
  2. 2 Whether the doctrine of strict compliance applies under UCP 500 in the context of the transaction.
  3. 3 Whether the appellant could rely on a disclaimer under Article 18 of UCP 500 to avoid liability.

Ratio Decidendi

The appellant bank was liable for breach of duty in failing to ensure strict compliance with the letter of credit terms, accepting discrepant documents, and making payment after the expiry of the L/C. The doctrine of strict compliance applies under UCP 500, and the appellant could not rely on the Article 18 disclaimer as it was neither brought to the respondent's notice nor accepted. The agency relationship between the issuing and correspondent banks made the appellant responsible for the correspondent bank's actions.

Court Disposition

appeal dismissed

Orders

  • Judgment of the trial court affirmed.
  • Appellant bank held liable for refund of US$50,000 to respondent.