Computer Place Services Pte Ltd v Malayan Banking Bhd

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: G P Selvam J
• Judgment Date: 08 July 1996
• Neutral Citation: [1996] SGHC 135
• Citation: [1996] SGHC 135
• Subject Matter: Payment made without draft,Whether materiality of draft was a factor,Non-compliance of terms and conditions of banker's documentary credit,Estoppel by conduct,Draft not presented,Letters of credit,Banking,Breach of terms and conditions of banker's documentary credit,Waiver and ratification of non-compliance,Documentary credit
• Published date: 19 September 2003
• Date: 08 July 1996
• Plaintiff Counsel: Harpal Singh and B Mahtani (Harpah Wong & Partners)
• Docket Number: Suit No 1065 of 1993
• Defendant Counsel: Sarjit Singh and V Coomaraswamy (Shook Lin & Bok)

Cur Adv Vult

Facts

This case concerns a banker`s documentary credit. The circumstances which gave rise to the case are as follows. In October 1991 the plaintiffs, a Singapore company, had agreed to purchase a consignment of Philip Morris Malboro cigarettes from an American firm called HGS International of Atlanta, Georgia. The agreed country of origin and shipment of the goods was Mexico. To make payment of the price of the goods the plaintiffs on 11 October 1991 requested their bankers in Singapore, the defendants, to establish an irrevocable documentary letter of credit for US$864,580 in favour of the sellers. The request was contained in a standard application form of the defendants. The defendants issued the credit through First Interstate Bank of California, San Franciso (the advising bank). The defendants issued the credit on 16 October 1991. The credit was subject to the Uniform Customs and Practice for Documentary Credit, 1983 Revision (the UCP).

The latest shipment date stipulated in the credit application was 2 December 1991, that is 14 days before expiry of the credit, which was 16 December 1991. The final destination of the goods was Bulgaria as the plaintiffs had resold the goods to Bulgarian buyers. The only Singapore connection to the transaction was that the openers and opening bank of the credit were in Singapore. The operative part of the credit read as follows :

We hereby issue in your favour this irrevocable documentary credit which is available by your drafts in duplicate at sight drawn on the above applicant for invoice value accompanied by the following documents (in duplicate unless otherwise specified). [Emphasis added.]

The credit went on to enlist the documents required by the plaintiffs beginning with signed commercial invoices in duplicate as stated in the application. A draft was not one of them because it did not concern them. In this transaction the only function of the draft was to serve as a demand on the defendants for payment of the invoice by the defendants.

The defendants received the documents from the advising bank which was also the negotiating bank on 6 December 1991. No draft was received. The next day (7 December 1991) the defendants sent a letter to the plaintiffs in the following terms :

We forward herewith the documents relating to the above-mentioned bill(s) for payment/acceptance and would like to draw your attention to the following discrepancy/discrepancies:

1 Description of goods differ from LC.

(2) Insurance policy shows claims payable at destination instead of Singapore.

(3) Insurance policy dated later than shipment date.

(4) Shipper/packing list presented i/o packing list.

(5) Insurance claused `not older than 90 days`.

(6) Gross weight on BL differs from other docs.

(7) All docs except invoices and cert of origin claused `Made in USA`.

(8) Cert of freshness/inspection -

(a) FOB value USD864,500 & CIF value USD950,000.

(b) B/L No and date of invoice differs from actual docs.

If the documents are acceptable to you please confirm by signing and returning us the attached reply form to enable us to instruct the negotiating bank to release the guarantee held in respect of this/these bill(s).

[Emphasis added.]

Notwithstanding the above, the guarantee held will be released on payment of the bill(s) or the issuance of trust receipt unless otherwise instructed.

It is important to observe that the `the documents` were forwarded for their approval and the plaintiffs were asked whether `the documents` were acceptable. No draft was sent as one of `the documents` as the defendants did not receive it. I shall call the above `the discrepancy letter`.

On 9 December 1991 the defendants sent another letter in standard printed form the material part of which read as follows :

Please note that we have received the undermentioned documents on yourselves. ...

Please note that the documents relating to this bill are available for your inspection at any time during office hours. If no objection to the contrary is received by us within one week from the date of this advice we shall take it that the documents are in order and no subsequent objection as to these documents can therefore be entertained.

I shall call the above `the invitation to inspect the documents`.

On 11 December 1991 the plaintiffs signed and sent the following letter to the defendants. The draft of this letter had been prepared by the defendants. All the plaintiffs did was to sign and send it to the defendants.

We have examined the documents relating to the abovementioned bill(s) presented to us for payment/acceptance and have noted the following discrepancy/discrepancies, to which our attention has been drawn.

[The letter reproduced the discrepancies set out in the defendants` discrepancy letter.]

Nevertheless, the documents are acceptable to us and we hereby authorise you to instruct the negotiating bank to release the guarantee(s) held by them in respect of this/these bill(s).

I shall call the above `the letter of acceptance of discrepancies`.

The second letter read as follows :

We have examined the documents relating to the abovementioned bill presented to us for payment and have noted the various discrepancies contained therein. Nevertheless, the documents are acceptable to us and we hereby authorise you to instruct the negotiating bank to release the guarantee held by them in respect of the said bill.

I shall call this `the letter of payment authorization`.

The plaintiffs do not appear to have responded to the invitation to inspect the documents at the premises of the defendants. They, however, asked for the release of the documents against payment and the defendants complied with the request on 12 or 13 December 1991. The plaintiffs did this because they wished to take delivery of the cargo or transfer the documents...