Banks’ Examination Duties in Letter of Credit Transactions: Transport Documents’ Experience

The article is designed to outline the main issues associated with using transport documents in the documentary credit transactions and, in particular, bills of lading: references will be made to the interpretation of the definition of «clean bill of lading» under the UCP 600 rules and to the most common discrepancies and non-documentary conditions encountered by banks during the documents’ examination. After a brief analysis of the main features of letters of credit and the rules governing the documentary credit, the paper mainly examines the criteria that banks should follow for identifying conforming documents under a letter of credit, focusing on the liability of the banks involved in the transaction. In such a perspective, this study provides an overview of the approaches followed by the Courts on the standard for documents’ examination to be adopted by banks in determining «a complying presentation», tracing the development of the strict compliance doctrine. In this scenario, the article also addresses the specific issue of the «fraud exception», which affects the autonomy principle of the letter of credit, in the light of the interpretation of the Courts.