The question of what constitutes ‘fraud in the transaction’ with respect to
international letters of credit varies considerably among jurisdictions. In
proving allegations of fraud, it is crucial for the practitioner to know the
relevant jurisdiction’s case law, especially if wider defences such as
inducement, unconscionable conduct or bad faith must be invoked. In this book,
the author argues that, whereas ‘fraud in the documents’ is generally
sufficient in cases involving commercial letters of credit, standby letters of
credit demand a wider fraud exception.
The central issue – how wide that fraud exception should be – is what this
book explores in depth.This author compares and critically examines the
application of the fraud exception in four major trade jurisdictions – the
United States, England, Canada, and Australia. With an overall focus on
how each jurisdiction’s fraud tests treat the autonomy of standby letters of
credit, she builds her arguments on such relevant sources and concepts as the
The presentation includes detailed summaries and analyses of leading cases in
all four jurisdictions.
when it can be shown that the beneficiary has ‘no bona fide belief’ in the
validity of its claim
international initiatives (ICC Rules and the UN Convention on Independent
Guarantee and Standby Letters of Credit);
the Sztejn Rule;
parameters of the ‘fraud in the transaction’ defence
prerequisites for injunctive relief;
arguing ‘fraud in the formation of the contract’;
performance bond cases;
applying the ‘breach of good faith’ defence;
‘negative stipulation’ in the underlying contract; and
equitable versus statutory/broader notion of unconscionability.
Lawyers and corporate counsel responsible for arguing claims or defences in
letter of credit transactions will welcome the way the author's research and
insight define the range of options in each case they handle. Academics also
will appreciate the systematic way the book frames a
complex area of international trade law.
About the Author.
List of Abbreviations.
Chapter 1 Introduction.
Chapter 2 Standby Letters of Credit and the Fraud Exception.
Chapter 3 ‘Fraud in the Documents’ and ‘Fraud in the Transaction’:
Seeking Conceptual Clarity.
Chapter 4 Application of the ‘Wider’ Fraud Exception to Standby Letters
of Credit: The US Position.
Chapter 5 The Fraud Exception: Position under Canadian Law. CHAPTER 6
The Fraud Exception under English Law.
Chapter 7 The Fraud Exception and the Principle of Unconscionability:
The Australian Law Position.
Chapter 8 Conclusion.
Appendix 1 Uniform Rules for Demand Guarantees (URDG758).
Appendix 2 United Nations Convention on Independent Guarantees and
Stand-by Letters of Credit.
Table of Cases.