Question
In their contract of sale of Dr Sage's Special Powders, AWLS (Melbourne distributor of health supplementsandnatural remedies)andHappyHerbsLtd(USmanufactureranddistributorofnatural and herbal remedies) agreed that payment would be
In their contract of sale of Dr Sage's Special Powders, AWLS (Melbourne distributor of health supplementsandnatural remedies)andHappyHerbsLtd(USmanufactureranddistributorofnatural and herbal remedies) agreed that payment would be by a commercial letter of credit. When Happy Herbsinformed thepurchaser,AWLS,thatthepowderswerereadyfordelivery,AWLSopenedaletter ofcreditwiththeNationalWealthBank (NWB)andtheBankofLosAngeles(BLA)wasnamedastheadvising bank. The letter of credit specified that it incorporated the UCP600 rules, and that presentation must be "made within 10 calendar days of the shipment or before 15 July 2018,which is when the credit expires."
AWLSorganised fortransportofthegoodsbyairwithLosAngelesAirways. On10June,after beingadvised thatthecredit wasopenedbytheBankofLosAngeles,HHshippedthegoodstoLos AngelesAirport,andLosAngelesAirways tookdeliveryofthegoods, issuinganAirWaybill.
However,HHhasencounteredaprobleminobtainingpaymentunderitsletterofcredit.After shipping thegoodson10June,aHHrepresentativepresented documentsandarequestforpaymentonFriday, 21June2018.On the following WednesdaythemanageroftheBankofLosAngelescontactedHHandadvised HHthat the Bank wasrefusingpaymentonthefollowing grounds:
- The letter of credit described the goods as "100,000 units Dr Sage's Special Powders." However, theinvoice presented describes the goods as 100,000 units Dr Sage's Special Remedy Powders- lavender, sage, corn flour not more than 30%
- The presentation is too late
Withreferencetoanyrelevant UCP600Rulesand any relevantcases,assess whetherthebanksareentitledto refuse payment in these circumstances.
1. Discuss whether the bank's refusal complies with the requirements under the UCP600.
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