Documentary credit
Transfer, assignment and fraud exception in documentary credits
By Charlotte GAUCHON23 March 2025In international trade, the documentary credit is a powerful tool for securing payments. Its strength lies in its independence from the underlying commercial contract. But what happens when the exporter wishes to mobilise this claim before it has even been realised? The circulation of documentary credits is governed by strict rules that must be mastered to avoid legal pitfalls. Direct transfer of the documentary credit Direct transfer enables the first beneficiary to assign his right to a third party, often his own supplier. According to Article 48b of the International Chamber of Commerce's Uniform Customs and Practice (UCP 600), "a credit may be transferred only if it is expressly designated as transferable by the issuing bank". A ruling by the French Supreme Court (Cour de Cassation) on 15 December 1975 confirms this rule, stating that the banker is not required to assess the validity of...
Documents and compliance in documentary credits: the decisive examination criterion
Documentary credit, Credit and consumer lawA poorly checked documentary credit can turn a promised international transaction into a legal nightmare. Examination of the documents is the critical stage where everything can come to a head. In my practice as a lawyer specialising in international banking law, this moment of verification crystallises the tensions between importers, exporters and banks. A minor discrepancy in...Legal relations in documentary credits: who owes what to whom?
Documentary credit, Credit and consumer lawIn international commercial transactions, the documentary credit offers valuable security to the parties. This payment technique is based on a complex network of obligations between buyer, seller and banks. Let's untangle these legal relationships and their practical implications. Relationship between buyer and seller The buyer (principal) undertakes to open a documentary...The documentary credit: mechanism and fundamental principles
Documentary credit, Credit and consumer lawIn international trade, payment is often the nerve centre of a transaction. The importer fears paying without receiving the goods ordered. The exporter fears delivery without payment. The documentary credit solves this equation by offering a mutual guarantee to both parties. This legal and financial instrument, a pillar of the...
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