Whether the applicant of the letter of credit may refuse to repay the letter of credit on the ground of defects in the shipping documents where the applicant did not notify the bank of the defects in the shipping documents within a reasonable time after accepting the shipping documents from the issuing bank (affirmative)

[Majority Opinion] In the transaction of a letter of credit, the issuing bank shall examine and confirm the transport documents presented for payment by the beneficiary or negotiating bank within the fixed period of time, and if there is any disagreement, it shall not pay the letter of credit amount unless there is a clear instruction from the applicant, such as the submission of sufficient conditions of the letter of credit to meet the purpose of the letter of credit even in the case of the documents. If the issuing bank arbitrarily decides to accept the defective documents or does not examine the documents with due care, the issuing bank may not, in principle, demand payment from the applicant, and if the applicant has already received the funds equivalent to the amount of the letter of credit, the issuing bank may not refuse to return the deposit if it did not comply with the conditions of the letter of credit. In addition, if the issuing bank unilaterally paid the transport documents in advance, in violation of the terms and conditions of the letter of credit, and then sent them to the applicant, the opening bank may not be deemed to have refused to return the transport documents, or may not be deemed to have violated the duty of the applicant to have agreed on the terms and conditions of the letter of credit within nine (1).

[Dissenting Opinion by the Majority Opinion is difficult to agree with the purport of the L/C system, which is used to maintain the trust relationship between the L/C applicant and the L/C issuing bank, and to emphasize only the obligations of the issuing bank under the L/C issuing contract, and to excessively uneasy the status of the issuing bank. In light of the diverse requests and instructions of the L/C applicant when issuing the L/C as a means of payment in international trade, whether the terms and conditions of the L/C applicant coincide with those of the L/C applicant can be more accurately determined as to the meaning and contents of the L/C, as long as the applicant is in a position to determine whether to accept the transport documents inconsistent with the importance of the terms and conditions of the relevant L/C, and as such, the applicant may not be deemed to have any defect in the terms and conditions of the L/C applicant’s delivery of the transport documents for a considerable period of time without raising any objection to the terms and conditions of the L/C applicant’s request or exercise the right to receive the documents by taking advantage of the documents, the applicant may not be deemed to have any defect.

[Separate Opinion] The legal relationship between the applicant of the letter of credit and the issuing bank is governed by the Uniform Customs and Practice for Documentary Credits to be incorporated into the terms and conditions of the contract, and the applicant’s duty of care to inspect and verify the transport documents within a reasonable period of time, and to notify the issuing bank of such inconsistency, it cannot be deemed that the applicant’s duty of care to inspect the documents and to notify the applicant of the defect in the terms and conditions of the letter of credit or the Uniform Customs and Practice for Documentary Credits should not be avoided if the applicant violated the above duty of care to notify the issuing bank of the defect. However, in light of the principle of good faith, the parties to the legal relationship should not consider the other party’s duty of care to notify the applicant of the defect in the letter of credit and to ensure that the applicant’s duty of care to request the issuing bank to return the documents is unreasonable, or if so, the other party’s duty of care is not readily acceptable in light of the concept of justice.

Article 2 of the Civil Act, Articles 15 and 16 of the Uniform Customs and Practice for Documentary Credits (amended by 4th of 1983), Article 13 of the Uniform Customs and Practice for Documentary Credits (amended by 5th of 193)

Supreme Court Decision 97Da16114 delivered on March 27, 1998 (Gong1998Sang, 1166), Supreme Court Decision 97Da31298 delivered on June 26, 1998 (Gong1998Ha, 1964)

Korea

Korea Exchange Bank (Attorney Lee Jae-soo et al., Counsel for the plaintiff-appellant)

Supreme Court Decision 97Da31298 Delivered on June 26, 1998

Seoul High Court Decision 98Na37226 delivered on July 23, 1999

All appeals are dismissed. The costs of appeal are assessed against each appellant.

1. Summary of the judgment below

According to its findings, the court below held that the defendant had a duty to return the US dollars of the amount deposited by the plaintiff, barring any special circumstance, since the defendant violated the payment terms of the letter of credit, and barring any special circumstance, the applicant for the letter of credit who received the shipping documents from the issuing bank has a duty to notify the plaintiff of his refusal to accept the letter of credit within a reasonable period of time, and is not entitled to demand the return of the letter of credit on the ground of the defect in the shipping documents. The defendant's defense that the applicant for the letter of credit who received the shipping documents from the issuing bank is not entitled to demand the return of the letter of credit on the ground of the defect in the shipping documents. In this case, the court below, in light of the legal principles as stated in its holding, ordered the applicant to unilaterally pay the transport documents to the beneficiary in violation of the payment terms of the letter of credit, and rejected it on the ground that there is no reason or ground that the applicant should not demand the return of the letter of credit deposit if the applicant fails to comply with such notification terms. In conclusion, the defendant's return of the amount of the bill from the next day of this case to the notice.

2. Judgment on the grounds of appeal

A. As to the Plaintiff’s ground of appeal

In the first instance court where the plaintiff's claim is dismissed and the plaintiff's appeal is reversed and remanded by the Supreme Court after the second instance court's dismissal and the court below accepted the plaintiff's claim, in light of the progress of the lawsuit, there is a reasonable ground to deem that the defendant's appeal as to the existence or scope of the obligation is reasonable until the judgment of the court below is rendered after remanding in the light of the progress of the lawsuit (see, e.g., Supreme Court Decision 92Da23827, Oct. 13, 1992). In this regard, the court below's approval of damages for delay by the rate of 5% per annum under the Civil Act is just until the date the judgment of the court below is rendered,

B. As to the Defendant’s ground of appeal

(1) On the first ground for appeal

In the L/C transaction, the issuing bank shall investigate and confirm the shipping documents presented for payment from the beneficiary, negotiating bank, etc. within the fixed period of time, and if there is any disagreement, it shall not pay the L/C amount unless there is a clear instruction from the applicant, unless there are special circumstances such as the submission of the conditions of the L/C, even if there is a minor disagreement. If the issuing bank arbitrarily decides to accept the defective documents or does not investigate the documents with due care, and if the issuing bank pays the L/C amount by the defective documents, the issuing bank may not, in principle, claim payment from the applicant, and if it has already received the funds equivalent to the amount of the L/C amount from the applicant, it may not refuse to return the deposit.

In addition, if the opening bank unilaterally pays the letter of credit in violation of the terms and conditions of the letter of credit, and forwards the transport documents to the applicant, barring any special agreement between the parties, the opening bank cannot be deemed as not allowing the opening bank to refuse to pay the transport documents or to claim the return of the deposit on the letter of credit on the ground of the inconsistency between the transport documents and the conditions of the letter of credit, and it is difficult to view that there is a practice in the transaction of the letter of credit to be viewed as such, or that the effect of the above obligation and negligence should be recognized on the basis of the good faith or the good faith principle, in the event the applicant neglected to do so, to check and confirm the transport documents and to notify the opening bank within a reasonable period of time.

The Supreme Court Decision 97Da16114 Decided March 27, 1998, which held that, in principle, the applicant may not refuse to refund the letter of credit to the issuing bank or claim the return of the deposit on the letter of credit on the ground of a disagreement between the shipping documents and the conditions of the letter of credit, is modified to the extent inconsistent with the above legal principles, unless otherwise stipulated by the parties.

In light of the records, the issue of inconsistency between the text of the letter of credit and the shipping documents in this case is acknowledged by the court below as follows: ① the shipping notice stated as a special condition in the letter of credit was not properly made, ② the performance guarantee was issued last one year and 11 months, ③ the arrival port stated in the letter of credit is different, ④ the consignee's name stated in the letter of credit and the bill of lading were different, ④ the defendant did not raise an objection to the defendant who is the issuing bank. ② the defect in the letter of credit can be viewed as a defect in that the special condition in the letter of credit is not a document condition, and ② the defect in the letter of credit can be viewed as a defect in that it can be viewed as not only the defect in the letter of credit but also the defect in the bill of credit's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of lading's bill of discharge.

On the other hand, in this case where the Defendant, as the issuing bank, unilaterally paid the letter of credit to the beneficiary in violation of the payment terms and conditions of the letter of credit, and unilaterally sent the transport documents to the applicant, the Defendant merely stated that the Defendant, around December 29, 1992, notified the Plaintiff of whether to accept the transport documents sent to the Plaintiff within three days, may not be deemed as claiming the return of the deposit in the event the applicant has the above defect notification obligation, and the applicant did not fulfill such notification obligation, and there is no other evidence to acknowledge otherwise in the record.

Therefore, the court below's rejection of the defendant's defense is just in accordance with the above legal principles, and there is no error in the misapprehension of legal principles as to the examination of documents and the defect notification obligation of the applicant of the letter of credit, as alleged in the ground of appeal. The defendant's ground of appeal on

(2) On the second ground for appeal

In light of the records, the court below is just in rejecting the defense of the defendant's decision on the ground that there is no other evidence to acknowledge the remainder of the evidence, and there is no error of misconception of facts due to the violation of the rules of evidence. The defendant's ground of appeal on this part is without merit.

C. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each appellant. It is so decided as per Disposition by the assent of all participating Justices, except for a dissenting opinion by Justice Song Jin-hun and a separate opinion by Justice Son Ji-yol, as to the judgment of Article 2-b (1) of this Decision.

3. Dissenting Opinion by Justice Song Jin-hun

A. The majority opinion states that, even if the issuing bank did not comply with the terms and conditions of the letter of credit, the applicant must check and confirm the transport documents in violation of the terms and conditions of the letter of credit and send the transport documents to the applicant, and shall notify the opening bank within a reasonable period of time that the transport documents are inconsistent with the terms and conditions of the letter of credit, or the applicant shall not refuse to refund the letter of credit or demand the return of the deposit on the grounds that the transport documents and the conditions of the letter of credit are inconsistent, and the applicant shall return the money deposited by the Plaintiff to the Plaintiff in violation of the terms and conditions of the letter of credit payment.

B. However, the Majority Opinion’s view is difficult to agree with the following points: (a) the fiduciary relationship existing between the L/C issuing bank and the applicant is set aside; (b) the purpose of the L/C system used to guarantee payment in international trade; and (c) the remaining issuing bank’s position that emphasizes only the obligations of the issuing bank in the L/C issuing contract is excessively uneasible.

In ordinary, when a letter of credit used as payment means in international trade is opened, the text and conditions of the letter of credit shall be determined according to the applicant’s diverse requests and instructions. As such, more accurate and accurate identification of the meaning and contents of the terms of the letter of credit may be made as to whether the conditions of the letter of credit and the actual transport documents coincide with those of the actual transport documents, and as long as the applicant is in a position to decide whether to accept the inconsistent transport documents according to the importance of the terms of the letter of credit in question, it shall be deemed that the applicant does not raise any objection to the transport documents delivered to him/her for a reasonable period even if he/she receives the transport documents delivered to him/her, or exercises his/her right by receiving the documents using them, etc. If the applicant takes over the defective documents, and in principle, it does not constitute a ground for refusing to refund the letter of credit amount, and there is a change in the market situation, and thus, the applicant may cause serious disadvantages to the issuing bank in the document.

Furthermore, the issuing bank which received defective documents by negligence or negligence that did not mean that the letter of credit is required to promptly receive the notice of defects from the applicant in order to reduce the damage or to take measures necessary to recover the damage. Moreover, it is too harsh that the applicant is only in a intermediary position for the payment of the price of the goods, and that the applicant is only in a position as a broker for the payment of the price of the goods, and that the applicant may be liable to the issuing bank for the violation of the duty of document inspection at any time and may cause anxiety

Therefore, even though the Uniform Customs and Practice for Documentary Credits or a letter of credit issuance agreement between the parties has no special provision or agreement, in light of the relationship between the issuing bank and the applicant based on the trust relationship as seen earlier, the applicant shall, upon accepting the shipping documents from the issuing bank, examine the documents within a reasonable period of time, and shall notify the issuing bank immediately in the event of any defect that does not coincide with the terms and conditions of the letter of credit, and thereby, may be exempted from the obligation to repay the letter of credit amount. However, if the applicant fails to notify the issuing bank by a reasonable period of time, barring any special circumstance, the applicant may not refuse to repay the letter of credit amount to the issuing bank on the ground of defects in the documents.

Therefore, the opinion of the Supreme Court Decision 97Da16114 delivered on March 27, 1998, which the majority opinion intended to modify, should be maintained, and even if there are these precedents, the opinion of the Supreme Court Decision 97Da31298 delivered on June 26, 1998, which expressed the opinion that is contrary to the above precedents, should be modified.

C. On December 29, 1992, the court below found that the defendant sent to the plaintiff with the shipping documents received from the defendant Paris Branch and requested the plaintiff to accept them within three days, and the plaintiff received them and did not raise any objection as to the defect, and issued a notice of payment to return to the National Treasury the compensation for delay deducted at the time of the payment of the letter of credit kept by the defendant on January 11, 1993. The defendant paid it to the National Treasury on January 14, 1993. The plaintiff did not raise any objection to the defendant even after the payment of the price and the compensation for delay under the letter of credit of this case was confirmed that the freight under the shipping documents of this case had not been actually loaded, and the plaintiff received the shipping documents and filed a claim for the return of them on August 11, 1993.

On the other hand, according to the records, the plaintiff, as the applicant, approved the transport documents and did not raise any objection to the defendant with respect to any inconsistency between the transport documents of this case and the conditions of the letter of credit, and the remaining disagreement points are not deemed to be significant enough to doubt that the plaintiff, as the applicant, concluded the import contract of this case with Epico as the beneficiary under the letter of credit and concluded the import contract of this case and concluded the import contract of this case with Epico as the purpose of the letter of credit transaction of this case is in importing the cargo of this case. Thus, it is reasonable to view that the plaintiff, as the applicant did not raise any objection to the inconsistency points within a reasonable period from the time of accepting the transport documents of this case, cannot claim a return of the deposit for the letter of credit deposit against the defendant under the principle

D. Ultimately, the court below rejected the defendant's defense that the plaintiff did not assert any inconsistency between the above shipping documents and the conditions of the letter of credit, and did not err in the misapprehension of legal principles as to the legal relation between the applicant of the letter of credit and the issuing bank, its duty to notify, and the return of deposit money for the letter of credit, which affected the conclusion of the judgment. Thus, the part of the judgment below against

4. Concurrence by Justice Son Ji-yol

A. We agree with the majority opinion that in a case where the issuing bank has paid in advance the transport documents to the applicant in violation of the terms and conditions of payment on the letter of credit and then sent them to the applicant, barring any special circumstance, the applicant cannot be deemed to have the obligation to inspect and confirm the transport documents and notify the opening bank of any inconsistency with the terms and conditions of the letter of credit and to raise an objection within a reasonable period of time. We agree with the majority opinion that the part of the plaintiff's claim recognized by the court below in this case is legitimate, and thus the defendant's appeal against this part is dismissed. However, in light of the fact that the applicant and the issuing bank have a demand for good faith more than the ordinary transaction relation, the applicant may be held responsible for the process of receiving the transport documents and not notifying the defects in the documents within a reasonable period of time, and in consideration of the applicant's behavior or attitude, the applicant's request for the return of the deposit can not be permitted as a exercise of rights against the good faith principle, and this point is emphasized as follows.

B. The legal relationship between the L/C applicant and the issuing bank is basically governed by the Uniform Customs and Practice for Documentary Credits incorporated into the contents of the L/C issuance contract between the parties, and if there is any disagreement between the applicant who received the transport documents from the issuing bank and then notifies the issuing bank of such disagreement within a reasonable period of time, it cannot be deemed that the L/C applicant generally recognized the above documents inspection and defect notification duty and if not, he/she lost his/her right of objection due to such disagreement.

However, in light of the principle of good faith, which is a general principle of private law, that a party to a legal relationship shall not exercise a right or perform a duty by any content or method that is contrary to the equity or trust of the other party, taking into account the interests of the other party, the exercise of an individual’s right may be restricted if it is not acceptable in light of the concept of justice to exercise a right against the other party’s trust and to exercise a right against the other party’s trust from an objective perspective. Such principle is more widely applied between the L/C issuing bank and the L/C applicant based on high trust relationship. Therefore, in a case where the L/C applicant, who is the other party, made a speech or behavior to believe that the L/C applicant would waive his/her right to raise an objection, or the applicant is deemed to significantly violate the duty to protect the other party required under the principle of good faith, etc., the right of the

In particular, taking into account the legislative purport of Article 69 of the Commercial Act stipulating the buyer's duty of inspection without delay and the duty of notification of defects in the purchase and sale between merchants, the applicant is ordinarily to immediately inspect the transport documents, and in any point of view, the applicant, who is the actual transaction party, may detect the defects in the transport documents more easily than the issuing bank, whether the applicant would receive the shipping documents using the defective transport documents after the delivery to the applicant or bring an objection to the defects in the transport documents are entirely attributable to the applicant's intent, and there is no room for the issuing bank to participate in it, and it is not a big burden for the issuing bank to detect and notify the defects in the documents from the applicant. On the other hand, if it is proved that there is a defect, the issuing bank suffers a critical loss, and even if the issuing bank pays the letter of credit payment, it would be able to promptly take measures for recovery from damage if the applicant notifies the issuing bank of the defects in the transport documents within a prompt period.

Therefore, it is interpreted that the applicant has a duty to check and confirm the documents delivered by the issuing bank according to the agreement between the applicant and the issuing bank, as well as the case where the applicant finds out any defect that does not comply with the terms and conditions of the letter of credit and does not notify it without any justifiable reason, or where it is recognized that the applicant claims the return of the deposit by taking advantage of the fact that the documents sent by the issuing bank were not in compliance with the conditions of the letter of credit, or where it is recognized that the applicant claims the return of the deposit in a way to cope with the legitimate cause of refusal of the payment on the letter of credit, or because of the defect of the documents that cannot be a legitimate cause of refusal of the payment on the letter of credit, or that the applicant's claim for the return of the deposit, etc. goes beyond the legitimate scope of exercise of rights.

C. However, even if examining the facts established by the court below in light of the facts and records, the plaintiff was notified by the defendant only of the defect that falls short of a relatively important part of the disagreements in this case, and was ordered by the defendant to pay the letter of credit to the defendant. Since the goods themselves were not loaded, it is impossible for the plaintiff to receive the goods by using shipping documents, and there is no room to deem that the plaintiff made the claim in this case with an unfair or unfaithful intent to do so. Thus, it cannot be viewed that the plaintiff could not claim the return of the deposit for the letter of credit on the ground that the plaintiff did not notify the plaintiff of the defect within a reasonable period.

D. Therefore, the part in favor of the Plaintiff cited the Plaintiff’s claim for refund of deposit is justifiable, and the Defendant’s appeal of this case must be dismissed as it is without merit. However, there seems to be somewhat misunderstandings as to the development of the legal principles of the Majority Opinion, and the above separate opinion is written.

The final judgment of the Chief Justice of the Supreme Court (Presiding Justice) shall be delivered with Jin-hun Jin-hun, which is written by the Justice Lee Jin-hun, and the Justice Son Ji-yol who is written by the