Subject "Busneiss law"

Carrefour, one of the largest supermarket chains in the UAE, ordered 1000 tonnes of basmati rice from KRBL Limited, the largest exporter of rice in India. The contract price was in the amount of 500,000 USD, which the parties agreed to be paid by an irrevocable confirmed letter of credit. Carrefour requested its bank, Commercial Bank of Dubai, to open a letter of credit in favour of KRBL Limited.

According to the terms of the letter of credit, KRBL Limited was required to submit three documents: (i) commercial invoice; (ii) insurance policy; and (iii) bill of lading. After the cargo of rice was dispatched, KRBL Limited submitted the documents to India State Bank, its nominated correspondent bank. Upon verifying the documents, an employee of India State Bank discovered a discrepancy (error) in one of the documents. Both the commercial invoice and insurance policy stated that the total weight of the cargo of rice was 1000 tonnes, whereas the bill of lading recorded 950 tonnes.

During the sea journey to the UAE, the vessels temperature control system unexpectedly failed. Consequently, 200 tonnes worth of rice was damaged. Carrefour requested its bank to only pay for the 800 tonnes of undamaged rice.

Discuss the legal issues arising from the above scenario in relation to the letter of credit.