A Review on the effect of Non-documentary conditions under documentary credit transaction

A Review on the effect of Non-documentary conditions under documentary credit transaction

Purpose : This article deals with the effect of non-documentary conditions under documentary credit transactions. Research design, data, methodology : This paper adopts the qualitative research in collecting, analyzing, and interpreting case. Results : UCP 600 Art. 14(h) simply presents the method of treatment as to these conditions, namely, to ignore non-documentary conditions as if it did not exist, but, in practice, the construction of non-documentary conditions is not uniform and these situations would cause instability of credit transactions and would leads to confusion in judicial interpretations. The court has addressed the non-documentary conditions as surplus terms or document conditions which present reasonable documentary proof. The former approach, surplus conditions, may serve to protect the safety or integrity of documentary credit transactions, but not take into account the intent of the parties. Conversely, the second approach, treatment as document conditions, may undermine the safety of documentary transactions. Considering the essence of letter of credit transaction that is based upon documents evidencing factual performance, none of these constructions relating to non-documentary conditions will be optimal and each approach appears practical concerns. Conclusions : The matter of such a condition is a very troublesome and serious problem under letter of credit transactions. The matter of these conditions could be settled by a compromise between concerning parties.