1. Whether Sandhurst & Co. can prevent Bronzer Ltd. from using the letter of credit?

It is most humbly and respectfully submitted before this Honble Court that according to the
facts of the case the Sandust & Co. issued an irrevocable letter of credit in name of Brozer Ltd.
The letter of credit is defined as A letter from a bank guaranteeing that a buyer's payment to a
seller will be received on time and for the correct amount. In the event that the buyer is unable to
make payment on the purchase, the bank will be required to cover the full or remaining amount
of the purchase.1
Generally Letters of credit used in international transactions are governed by the International
Chamber of Commerce Uniform Customs and Practice for Documentary Credits. The general
provisions and definitions of the International Chamber of Commerce are binding on all parties.
Domestic collections in the United States are governed by the Uniform Commercial Code.2
We can make out from this discussion that letter of credit is a letter from a bank guaranteeing
that a buyer's payment to a seller will be received on time and for the correct amount. In the
event that the buyer is unable to make payment on the purchase, the bank will be required to
cover the full or remaining amount of the purchase. A letter from a bank guaranteeing that a
buyer's payment to a seller will be received on time and for the correct amount. In the event that
the buyer is unable to make payment on the purchase, the bank will be required to cover the full
or remaining amount of the purchase.
Further the elements of Letter of Credit are1.

A payment undertaking given by a bank (issuing bank)

2.

On behalf of a buyer (applicant)

3.

To pay a seller (beneficiary) for a given amount of money

4.

On presentation of specified documents representing the supply of goods

5.

Within specified time limits

6.

Documents must conform to terms and conditions set out in the letter of credit

7.

Documents to be presented at a specified place

All these elements are satisfied of letter of credit are satisfied by the current letter of credit.

1
2

http://www.investopedia.com/terms/l/letterofcredit.asp, last visited at 7th November 2014.

https://www.crfonline.org/orc/cro/cro-9-1.html, last visited at 7th November 2014.

Further irrevocable letter of credit may not be revoked or amended without the agreement of the
issuing bank, the confirming bank, and the beneficiary. An irrevocable letter of credit from the
issuing bank insures the beneficiary that if the required documents are presented and the terms
and conditions are complied with, payment will be made. If a letter of credit is irrevocable it is
referenced on its face.3
So we can infer that an irrevocable letter of credit is a type of documentary credit which can not
be cancelled or amended by the issuing bank without the agreement of the parties of the letter of
credit transaction i.e without the agreement between the issuing bank, the confirming bank and
the beneficiary.
But the same cant be obtained because according to the general practice of trade no company
will wave his right to get payment when he had performed all the duties on his part or his part of
contract, in present case as shown in subsequent issues the Bronzer Ltd. had performed the
contractual obligations on his part therefore the Bronzer Ltd. cant be supposed to work for free,
so they will not give consent to let the irrevocable letter of credit be revoked.
In the case of Reliance Salt,4the Honble Apex Court of India while dealing with the concept of
irrevocable letter of credit it was held that even in cases of alleged fraud or any case the
irrevocable letter of credit cant be revoked without prior agreement of parties, the same is to be
kept in mind in present case also and therefore the in the present case also it can be concluded
that Sandhust & Co. cant prevent Bronzer Ltd. from using the letter of credit.
Further according to the general definition and practice issuing bank can not cancel or amend an
irrevocable letter of credit without the written consent of the beneficiary.5therefore in the present
case also it can be concluded that Sandhust & Co. cant prevent Bronzer Ltd. from using the
letter of credit.

https://www.crfonline.org/orc/cro/cro-9-1.html, last visited at 7th November 2014.

2006 Indlaw SC 837.
5
http://www.letterofcredit.biz/what-is-irrevocable-letter-of-credit-definition-and-application.html, last visited on 7th
November 7, 2014.
4

2. Whether Sandhurst & Co. can reject the new consignment of 250 bottles?
It is most humbly and respectfully submitted before this Honble Court that Sandhurst & Co.
cant reject the new consignment of 250 bottles. Because they cant repudiate the contract as a
whole, and it is not possible according to the general practice of law that a part of contract can be
avoided when whole contract cant be avoided.
Further there is no contract or warranty in the present case basing on which Sandhurst & Co. can
repudiate the contract.

Generally the property in goods, whether specific or unascertained, does not pass if the seller
reserves a right of disposal of the goods. Apart from an express reservation of the right of
disposal, the seller is deemed to reserve the right of disposal in the following two cases:
Where goods are shipped to the buyer by the seller or his agent.

Also the Honble Court in the case of Multanmal Champalal v. Shah & Co.,6 held in a case
when goods were dispatched by the seller from Bombay to Bellary through a public carrier and
were subsequently lost before the payment of the price, the Court held that the loss was to be
borne by the buyer.
So we can make out that the title any risk in such contract when delivery is to be made by seller
by putting the goods into transmission, then such goods will be supposed to be in title of buyer
and he will be the owner of those goods. So in the present case also we can conclude that as the
process is already in motion by side of seller therefore the buyer had not got any say in this
contract now as this contract is complete on sellers part.
Further he is in obligation to at least examine the goods after taking the delivery and after that
he can analyze and form his opinions about the 250 bottles, one more point relevant at this

AIR (1970) Mysore 106

situation is that he had accepted the other consignments also so he is not having any valid
reason for non acceptance of this current consignment of 250 bottles.
Further the Section 56 of Sale of Goods Act which deals with Damages for non-acceptance is of
relevance, it reads as
56. Damages of non-acceptance- Where the buyer wrongfully neglects or refuses to accept
and pay for the goods, the seller may sue him for damages for non-acceptance.
The same is to be applied in the present case as the buyer has refused to accept the goods
without any reasonable cause therefore the buyer are liable to be sued for the damages of such
non-acceptance.