Bank's obligation to pay under letters of guarantee

• Main Author: Al-Talhouni, B.
• Published: University of Edinburgh 1997
• Subjects: 340
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.640327

The aim of this thesis is to discuss a bank's obligation to pay under letters of guarantee in English law, the Uniform Rules of the International Chamber of Commerce and the United Nation Commission on International Trade Law (UNCITRAL). Letters of guarantee that are issued by other financial institutions as surety or by insurance companies fall outside the scope of this thesis. This thesis is divided into six chapters. Chapter I outlines the importance of the letter of guarantee and the legal issues which are discussed in the rest of the thesis. Chapter II examines the legal nature of letters of guarantee by highlighting the problem of inconsistency of terminology, and by tracing the sources of law which regulate letters of guarantee. It examines a bank's obligation to pay under different types of letters of guarantee, and considers the parties to these instruments. Chapter III discusses the legal nature of a bank's obligation to pay. This includes the establishment of the bank's obligation to pay and some other issues related to this obligation, such as the mechanism of payment, the principle of independence and the duty of verification. Chapter IV analyses the effect of fraud and interlocutory injunctions (interim interdicts) on a bank's obligation to pay. This encompasses questions of evidence of fraud, the bank's role in preventing fraud and the effect of the court's injunction on the bank's obligation to pay. Chapter V discusses the ambit of the bank's duties and responsibilities under letters of guarantee. Issues such as the bank's duty to pay the proper beneficiary and the bank's limitation of liability are discussed in this chapter. Chapter VI discusses the problems associated with the issue of the choice of law in determining the law applicable to the bank's obligation to pay. It examines the principles that are applied by the English courts in deciding the applicable law to letters of guarantee and the effect of these principles on the bank's obligation to pay. The thesis is completed by a conclusion.