The development of commercial letters of credit & how they can be enhanced through limited government control.

MAPONDERA, MARSHAL N (2010) The development of commercial letters of credit & how they can be enhanced through limited government control. Other thesis, MIDLANDS STATE UNIVERSITY.

PDF (LLB Thesis/Dissertation in International Business Transactions)
The development of commercial letters of credit_ES.pdf - Accepted Version
Available under License Creative Commons Attribution Non-commercial.

Download (147kB) | Preview


This research paper discusses how minimised government interference in the operation of commercial letters of credit can actually improve their development as they are regulated by the Uniform Customs and Practice of Documentary Credits (UCP600). Government interference takes shape in foreign exchange control legislation, which does impede both payment and financing. Illegality attaches where the credit fails to meet legal requirements at place of payment or performance. Illegality is an established exception to the principle of autonomy under UCP600. Exceptions to the independence of the credit are necessary to safeguard against abuse. Illegality should not be extended to include government control as it distorts the operation of the credit. Illegality should be interpreted narrowly to include only parties to the agreement. Letters of credit are popular payment methods due to the security they offer and they are an autonomous transaction. Various negative implications arise where illegality is raised as a result of foreign exchange control; parties may attempt to defeat such illegality even through unlawful means. The research tracks the historical development of the standardisation of the commercial credit vis-a-vis common law. It is argued that the introduction of UCP has contributed little to the common law as UCP is not drafted in legal terms as it is intended as a code of practice for banks. It does not cover crucial legal consequences, rights and obligations. In the interests of trade facilitation WTO member states should review current exchange control regimes in their jurisdictions, to allow for free flow and uniform trade financing.

Item Type: Thesis (Other)
Additional Information: Please note that this is just an executive summary. Kindly contact the author for the full paper.
Uncontrolled Keywords: Documentary credits, commercial letter of credit, banker's commercial credit, illegality, fraud, exchange control regulations
Subjects: K Law > K Law (General)
Divisions: Universities > State Universities > Midlands State University
Date Deposited: 29 Dec 2015 07:04
Last Modified: 29 Dec 2015 07:04

Actions (login required)

View Item View Item