Case Study

Phua Chu Kang Ltd (PCK) is a leading commodity trading company headquartered in Singapore.

Crocodile Dundee Ltd (CD) is a company that processes, packs and sells soybeans from over 20 farms across Australia.

PCK purchased 100 metric tons of "Australian grown non-GMO (non-Genetically Modified) soybeans" from CD. The purchase was made under a CIF contract, goods to be shipped to Hong Kong from Port Kembla, New South Wales, Australia, latest date of shipment, March 15, 2018.

[Treat the additional facts in each part of the following questions independently from the other parts.]

Additional facts

An irrevocable letter of credit was issued by Merlion Bank in Singapore and confirmed by Kookaburra Bank in Sydney, Australia, for S$450,000 requiring the following documents:

insurance certificate for S$450,000,

clean bill of lading stating that the goods are in "apparent good order and condition"

invoice for 100 metric tons of non-GMO soybeans at S$450,000, and

an inspection certificate from anApproved Certifier appointed by Australian Organic Limited certifying that the soybeans are non-GMO

The soybeans were to be loaded on board the ship in Port Kembla, New South Wales, Australia and a bill of lading was issued, shipment dated 15 March 2018.

Scenario 1

The bill of lading contained a notification in red stating that the carrier was not responsible for any bursting of bags because "packaging was insufficient, several bags torn and re-sewn".The seller's commercial invoice and the inspection certificate stated that the goods were "organic soybeans". These documents were presented by CD toKookaburra Bank.Kookaburra Bankis unsure about making payment and has consulted Merlion Bank.

Scenario 2

The insurance certificate, clean bill of lading, invoice and inspection certificate were presented by CD to Kookaburra Bank as required under the Letter of Credit, and Kookaburra Bank and Merlion Bank proceed to make all relevant payments. A few months later, Merlion Bank discovers that the documents presented by CD were prepared carelessly by CD's employees. They were based on forged records and CD's employees failed to pick this up because they did not peruse the underlying documents and transactions fully. In reality, no soyabeans were loaded at Port Kembla and nothing was delivered.

Question 1

Scenario 1 : Should Merlion Bank andKookaburra Bankmake payment under the Letter of Credit? Please cite relevant provisions of the UCP (if any) to support your answer. (2 marks)

Question 2

Scenario 2 : Can Merlion Bank rescind the letter of credit and recover the sums of money paid out? Consider in your answer, the decision inBank of China Ltd, Singapore Branch v BP Singapore Pte Ltd[2021] SGHC 120.( 10 marks)