[1] The validity of non-documentary special terms and conditions added to the credit (the validity of limited terms and conditions)

[2] Whether the Korean bill of exchange law can be the governing law as to the method of accepting a bill of exchange between the L/C negotiating bank that is a Korean corporation and the L/C issuing bank (affirmative)

[3] Whether the drawee is liable pursuant to Article 29(2) of the Bills of Exchange and Promissory Notes Act in a case where the drawee gives notice of acceptance to the holder without stating the word of acceptance and signing and sealing the bill of exchange (negative)

[4] Whether the issuing bank is obligated to return the documentary credit where the negotiating bank presented the documentary credit documents and the documentary exchange to the issuing bank, but the non-fulfillment of special conditions added to the documentary credit does not occur due to the confirmation of non-fulfillment of the documentary credit (affirmative)

[5] The purport of Article 14 (e) of the Uniform Customs and Practice for Documentary Credits and Practice for Documentary Credits, which provides that the issuing bank shall lose its right to assert that the document does not comply with the terms and conditions of the letter of credit if the issuing bank, etc. intends to refuse to accept the document on the ground of a disagreement between the presented document and the presenter

[1] Article 13 (c) of the Uniform Customs and Practice for Documentary Credits provides that "if the documents that must be presented in the credit contain no specification, banks will consider them as not presenting such conditions and disregard them." However, as long as the principle of freedom of contract can be applied to the transaction of the credit, in principle, whether the contents of non-documentary special conditions stated in the credit are completely and clearly clear by the text of the credit in question, how the contents of the non-documentary special conditions were inserted in the credit in question, how the credit in question and non-documentary special conditions were inserted, whether the beneficiary would be able to participate in the fulfillment of the special conditions, and such non-documentary special conditions added to the credit in light of the nature of the credit in question cannot be deemed null and void. Once the validity of the credit in question is recognized, the credit in question cannot be viewed as invalid since the negotiating bank becomes aware or could sufficiently recognize the existence of such conditions after the issuance of the credit in question is also binding on the negotiating bank in question. Thus, the credit in question cannot be asserted to the negotiating bank.

[2] The Korean bill of exchange law can be the governing law with respect to the method of accepting a bill of exchange between the L/C negotiating bank that is a Korean corporate and the L/C issuing bank that is a Korean corporate. If the acceptance of a bill of exchange between the L/C negotiating bank that is a Korean corporate and the L/C issuing bank that is a Korean corporate does not meet the method stipulated in Article 25(1) of the Bills of Exchange and Promissory Notes Act, it cannot be asserted that the bill of exchange was effective and that the acceptance

[3] Article 29(2) of the Bills of Exchange and Promissory Notes Act provides that when a drawee, who stated acceptance on a bill of exchange, has cancelled his/her statement of acceptance before returning the bill, he/she shall be held liable according to the terms of acceptance as stated on the bill of exchange, if he/she has given written notice of acceptance to the holder, etc., he/she shall not be held liable pursuant to Article 29(2) of the Bills of Exchange and Promissory Notes Act.

[4] According to Article 14 (d) of the Uniform Customs and Practice for Documentary Credits, when there is a defect in the documentary credit presentation document, the issuing bank is required to keep the presented document for the presenter or return it to the presenter. If the negotiating bank presented the documentary credit documents, such as shipping documents, and the bill of exchange to the issuing bank, but it is confirmed that the special condition added to the letter of credit is not fulfilled, the issuing bank's duty to pay the documentary credit does not occur, it is reasonable to see that the document presented in principle should be returned to the presenter, etc. in principle, although there is no express provision in the Uniform Customs and Practice for Documentary Credits regarding the duty to return the presented document, it is reasonable to see that the document presented in this context should be returned to the issuing bank, etc.

[5] Article 14 (e) of the Uniform Customs and Practice for Documentary Credits provides that where an issuing bank, etc. intends to refuse to accept a document on the ground of a disagreement in the document presented, the issuing bank shall lose its right to assert that the document does not comply with the terms and conditions of the letter of credit if it did not notify the presenter of the disagreement without delay and return the document, etc.

[1] Article 13 (c) of the Uniform Customs and Practice for Documentary Credits, Article 105 of the Civil Code / [2] Article 53 of the Private International Act, Article 25 (1) of the Bills of Exchange and Promissory Notes Act / [3] Article 29 of the Bills of Exchange and Promissory Notes Act / [4] Article 14 (d) of the Uniform Customs and Practice for Documentary Credits, Article 105 of the Civil Code / [5] Article 14 (e

[1] Supreme Court Decision 200Da12983 decided Nov. 24, 2000 (Gong2001Sang, 128) Supreme Court Decision 2000Da50299 decided May 28, 2002 (Gong2002Ha, 1504) / [4] Supreme Court Decision 2000Da12983 decided Nov. 24, 200 (Gong2001Sang, 128) / [5] Supreme Court Decision 98Da35037 decided Jun. 9, 200 (Gong200Ha, 1593)

New Bank Co., Ltd. (Law Firm Han-won, Attorneys Yu Jung-won et al., Counsel for the plaintiff-appellant)

Korea Bank (Law Firm Geosung, Attorneys Sung Sung-soo et al., Counsel for defendant-appellant)

Seoul High Court Decision 2005Na52261 decided September 20, 2007

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the validity of non-documentary special conditions of the Credit

Article 13(c) of the Uniform Customs and Practice for Documentary Credits provides that "if a document that must be presented is expressly stated in the letter of credit, banks will consider such condition as not presenting it and disregard it." However, as long as the principle of freedom of contract can be applied to the transaction of credit, in principle, whether the contents of non-documentary special conditions stated in the letter of credit are completely and clearly clear by the text of the letter of credit in question, how the contents of the non-documentary special conditions were inserted in the letter of credit in question, the details of the non-documentary special conditions, whether the beneficiary has failed to comply with the non-documentary special conditions, and the degree of involvement of the beneficiary in the fulfillment of the special conditions, etc., there are cases where the non-documentary special conditions added to the letter of credit cannot be deemed null and void even if they are not desirable in light of the nature of the letter of credit in light of the nature of the credit in question, and once it is recognized as valid, banks will not be able to recognize or fully recognize the existence of such conditions after the issuance bank.

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and rejected each of the instant white letters of credit as follows: each of the instant white letters of credit contains an additional condition that accepts and pays it at maturity (hereinafter “the instant special terms of credit”) on the condition that the export procedure of the relevant white letters of credit is realized; it constitutes a non-documentary condition that makes it impossible to determine whether the conditions are fulfilled by the letter of credit itself; however, the contents of the instant special terms of credit are complete and clear by the text of the letter of credit; and there is an agreement between the parties to the instant letter of credit, including the beneficiary; further, the instant special terms of the instant letter of credit are exported by the e.g., the e., the applicant of each of the instant white letters of credit (hereinafter “FM”) on the ground that each of the instant special terms of credit were not fulfilled, and thus, it cannot be deemed that each of the instant special terms of the instant letters of credit were valid for the Plaintiff’s purchase of the e.g., the instant special letters of credit (hereinafter “IFM”).

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the interpretation of Article 13 (c) of the 5th Uniform Customs and Practice for Documentary Credits.

2. As to the method of accepting a bill of exchange, the validity of conditional acceptance, and the obligation to return documentary credit documents

A. Article 53(1) of the Private International Act provides, “The method of a bill of exchange, a promissory note, and a check shall be governed by the law of the place of signature,” while Article 53(3) of the same Act provides, “In cases where the manner of a bill, a promissory note, and a check performed by a national of the Republic of Korea is null and void under the law of the Republic of Korea, it shall be effective for other nationals of the Republic of Korea.” Thus, the method of acceptance of a bill between the negotiating bank that is a Korean corporation and the issuing bank that is a corporation of the Republic of Korea may be governed by the law of the Republic of Korea. However, Article 25(1) of the Bills of Exchange and Promissory Notes Act provides, “The acceptance shall be written on the bill of exchange.” The drawee shall write his name and affix his seal or affix his signature on the bill of exchange. If the bill of exchange between the negotiating bank that is a corporation of the Republic of Korea and the issuing bank that is a corporation of the Republic of Korea shall be bound by the bill of exchange Act without recourse to the bill of exchange.”

In light of the above legal principles and records, as the Plaintiff bank, a Korean corporation, purchased bills of exchange and shipping documents issued by the Plaintiff bank based on each of the instant white letters of credit from Bosch Rexroth and Liber, and sent and presented them to the Defendant bank, a Korean corporation, the Republic of Korea, which established each of the instant white letters of credit, it can be seen that the Defendant bank notified the Plaintiff bank, the document delivery bank, of its intent to accept the relevant bill of credit on condition that it will receive the relevant bill of credit in the same manner as the special condition of this case, which is the conditions for opening each of the instant white letters of credit, while determining the maturity of the bill of exchange, the Plaintiff bank, the document delivery bank, as the document delivery bank, and it cannot be deemed that the Defendant bank did not accept or sign the bill of exchange in accordance with the language and text of Article 29 (2) of the Act, since there is no evidence to acknowledge that the Defendant bank signed and sealed the relevant bill of exchange based on each of the instant white letters of credit and its signature or signature on the face of the bill.

The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the method of acceptance of a bill of exchange, conditional acceptance, liability pursuant to the notice of acceptance under Article 29 (2) of the Bills of Exchange and Promissory Notes Act, as otherwise alleged in the ground of appeal.

B. According to the provisions of Article 14 (d) of the Uniform Customs and Practice for Documentary Credits and Practice for Documentary Credits, when there is a defect in the documentary credit presentation document, the issuing bank is required to keep the presented document for the presenter or return it to the presenter. If the negotiating bank presented the documentary credit documents, such as shipping documents, and the bill of exchange to the issuing bank, but it is confirmed that the special condition attached to the letter of credit is not fulfilled, and the obligation to pay the documentary credit price does not occur due to the confirmation, the issuing bank's duty to return the presented document is not stipulated in the Uniform Customs and Practice for Documentary Credits, but it is reasonable to see that the presented document should be returned to the presenter, etc. in principle, by analogy of the above provision, unless there are special circumstances to see that the presenter, etc. renounced the right to request the return of the presented document (see, e.g., Supreme Court Decision 200Da129

According to the reasoning of the judgment below, the court below notified the plaintiff bank to the effect that the defendant bank will accept the letter of credit when the special conditions of this case, which are the conditions for opening each of the L/C in this case, were met, is merely notification of the terms and conditions set forth from the time of opening each of the L/C in this case and the bill of exchange derived therefrom, and cannot be deemed as refusing to accept the letter of credit or accept the letter of credit in addition to any new conditions that were not originally agreed by the parties. Thus, the court below determined that the defendant bank's point was not obligated to immediately return the documents, since the defendant bank's issuing bank, which was the issuing bank of each of the L/C in this case, was not obligated to submit the documents to the plaintiff bank to the effect that each of the L/C in this case, was not satisfied with the terms and conditions of the L/C in this case, and that the bank's purchase of each of the documents in this case, which was the beneficiary and the bank's purchase of each of the documents in this case, was also scheduled to issue.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the interpretation of Article 14 (d) of the Uniform Customs and Practice for Documentary Credits and the duty to return documentary credit documents, as otherwise

3. As to the tort by deception, violation of the good faith principle, and violation of Article 151(3) of the Civil Act

According to the reasoning of the judgment below, the court below rejected the plaintiff's assertion that the defendant bank's point was aware that the special condition of this case was not likely to be fulfilled at the time of the issuance of each white documentary credit of this case, or that the plaintiff continued to open each white documentary of this case with additional conditions despite the plaintiff's well-known knowledge of this fact, and there is no other evidence to prove otherwise that the defendant bank's point of view was unable to fulfill the special condition of each white documentary of this case's each white documentary of credit of this case, or the plaintiff's refusal of payment of each white documentary of this case on the ground of the non-fulfillment of the special condition of this case is against the principle of good faith, and further, as long as the special condition of this case stated in each white documentary of this case cannot be fulfilled at the time of the issuance of each white documentary of this case's white documentary of credit of this case, the court below rejected the plaintiff's assertion that the special condition of this case's each white documentary of this case cannot be fulfilled under Article 151 (3) of the Civil Act.

In addition, even in light of the records, the court below cannot be deemed to have violated the rules of logic and experience when selecting the evidence and comparing and evaluating the probative value of evidence as above. Thus, the argument in the grounds of appeal disputing the violation of the rules of evidence cannot be accepted.

4. As to the loss of the right to refuse payment under Article 14 (e) of the Uniform Customs and Practice for Documentary Credits for Documentary Credits

Article 14 (e) of the Uniform Customs and Practice for Documentary Credits provides that where an issuing bank, etc. intends to refuse to accept a document on the ground of a disagreement between the documents presented by the issuing bank and the issuing bank, the issuing bank shall lose its right to assert that the document is not in compliance with the terms and conditions of the letter of credit unless it notifies the presenter of the disagreement without delay and return the document, etc.

According to the reasoning of the judgment below, the court below determined that the defendant bank's bank's notice of acceptance of the bill of exchange on the condition that the plaintiff bank, the transmitting bank, received the price of each of the instant white documentary credit in the same manner as the special condition of the instant documentary credit, cannot be deemed as refusing to accept the entire documentary credit of this case. Further, even if the defendant bank's point of view was unable to assert any inconsistency because it did not notify the discrepancy in the documentary credit documents, the plaintiff bank, the negotiating bank of each of the instant white documentary credit of this case, still can claim the price of each of the instant white documentary credit on the condition that the special condition of this case is fulfilled as agreed upon at the time of opening each of the instant white documentary credit of this case, and it does not constitute a claim for payment under the condition that the plaintiff bank was not subject to the special condition of this case pursuant to the provisions of Article 14 (e) of the Uniform Customs and Practice for Documentary Credits.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the interpretation of Article 14 (e) of the Uniform Customs and Practice for Documentary Credits 5.

5. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Hong-hoon (Presiding Justice)