[1] In the case of a documentary credit transaction under which the issuing bank must pay the letter of credit on the condition of the consignee's payment of the goods, in which the issuing bank notifies the negotiating bank of the acceptance of the documentary and shipping documents attached to the documentary credit and the due date for the extension of the documentary credit with a certain maturity, and requested the negotiating bank to extend the documentary credit with a certain maturity, whether the issuing bank's refusal of payment on the letter of credit is contrary to the principle of waiver of rights or the principle of no-competence under the case law of the New York, in case of a non-documentary special condition that the issuing bank shall pay the letter of credit on the condition of the consignee's payment of the goods

[2] The case denying the establishment of liability for damages caused by false representation different from the facts under the New York Act on the ground that the negotiating bank cannot be deemed to have believed that the issuing bank would pay the letter of credit even if the non-documentary condition of the letter of credit was not fulfilled

[3] Whether acceptance of a bill of exchange under the New York Uniform Commercial Code constitutes acceptance of a bill of exchange under the New York Uniform Commercial Code, where a notice of acceptance was given without signing on the bill of exchange for the purpose of acceptance (negative)

[1] If a non-documentary terms and conditions stipulate that "if the final purchaser fails to pay the amount of goods referred to in the letter of credit within 75 days from the date of shipment of the bill of lading," which are stipulated in the 4th Uniform Customs and Practice for Documentary Credits enacted by the International Commercial Conference of the United States, the bill and documents accepted shall not be paid on the due date." Although the issuing bank held the bills and shipping documents attached to the said letter of credit presented by the negotiating bank and notified the negotiating bank of its acceptance and its due date, the issuing bank cannot be deemed to have refused to accept the said letter of credit because it did not comply with the above non-documentary terms and conditions of the issuing bank's refusal to accept the letter of credit because it did not comply with the above non-documentary terms and conditions of the issuing bank's refusal to accept the letter of credit, even though it did not request the beneficiary and negotiating bank to extend the due date, and it could not be deemed that the issuing bank's refusal to accept the letter of credit without any specific reasons that it rejected the above non-documentary terms and conditions.

[2] The case denying the establishment of liability for damages caused by false representation under the laws of New York of the United States on the ground that the negotiating bank did not believe that the negotiating bank would pay the letter of credit even if the non-documentary condition of the above letter of credit was not fulfilled, solely on the ground that the negotiating bank notified the negotiating bank of the acceptance of the bills and shipping documents attached to the letter of credit and paid the price for a part of the letter of credit with the maturity of maturity

[3] According to the provisions of Article 3-410 (1) of the New York Uniform Commercial Code of the United States of America, acceptance of a bill of exchange is a commitment signed by an underwriter to accept a bill of exchange as it is presented, and it must be stated on the bill of exchange. Thus, it cannot be deemed that a legitimate acceptance was made solely on the ground that the L/C negotiating bank merely notified the acceptance of the bill of exchange to the L/C negotiating bank without signing on the bill of exchange to the purport of acceptance.

[1] Article 16 of the Uniform Customs and Practice for Documentary Credits (the 4th Amendment in 1984), Article 16 of the New York Uniform Commercial Code / [2] Article 32 of the Private International Act / [3] Article 3-410 (1) of the New York Uniform Commercial Code

Daegu Bank (Law Firm Gyeong & Yang, Attorneys Yoon Ho-ho et al., Counsel for the plaintiff-appellant)

Korea Exchange Bank (Law Firm Spah, Attorneys Yu-hee et al., Counsel for the defendant-appellant)

Filisung Amera Incopo (Hyosung America, Inc.) (Law Firm Pacific, Attorneys Kang Jong-gu et al., Counsel for the defendant-appellant)

Supreme Court Decision 99Da1338 delivered on May 30, 2000

Seoul High Court Decision 2000Na26434 delivered on April 3, 2001

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

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2

If the non-documentary terms and conditions stipulate that "if the final purchaser does not pay the price for the goods referred to in the letter of credit within 75 days from the date of shipment of the bill of lading," the documentary letters and documents accepted shall not be paid on the due date for the issuance of the letter of credit, which are stipulated in the 4th Uniform Customs and Practice for Documentary Credits established in the New York, the issuing bank shall notify the negotiating bank of the receipt and the due date for the issuance of the letter of credit, with the possession of the documentary bills and shipping documents attached to the above documentary letters and documents presented by the negotiating bank, and the issuing bank shall not be deemed to have refused to accept the letter of credit without the consent of the applicant for the issuance of the letter of credit at the request of the negotiating bank and the negotiating bank for the extension of the due date, and even if the non-documentary terms and conditions were not fulfilled, the negotiating bank shall not be deemed to have rejected the above non-documentary terms and conditions of the letter of credit, nor shall it be deemed that the negotiating bank did not accept the letter of credit without any specific consideration.

As long as the non-documentary condition stated in the letter of credit of this case is deemed valid, the court below held that the refusal of payment on the letter of credit by the defendant bank, which is the issuing bank of the documentary credit of this case, on the ground of the non-performance of the above condition cannot be deemed as contrary to the principle of good faith or the principle of no-competiation, and that the act of the defendant bank cannot be deemed as being applied to the waiver of rights or the principle of no-competiation under the New York case law of the United States of New York. Such judgment of the court below is included in the judgment of the plaintiff's assertion that the plaintiff lost the right to refuse payment on the basis of the Uniform Customs and Practice for Documentary Credits, and the above judgment is correct in light of the above legal principles, and there is no error of law such as misunderstanding of legal principles

2. As to the third ground for appeal

According to the New York law in which the documentary credit of this case was issued, the victim should have believed that the victim made a false statement, etc. in order to be liable for damages due to the false false statement. As long as the non-documentary condition stated in the documentary credit of this case is valid, and the negotiating bank purchased the documentary credit of this case under the circumstance that the negotiating bank can recognize or be sufficiently aware of the existence of such non-documentary condition, it cannot be deemed that the negotiating bank believed that the negotiating bank would pay the documentary credit of this case to the issuing bank even if the negotiating bank did not fulfill the above non-documentary condition, such as notification of acceptance of the documentary bills and shipping documents attached to the documentary credit of this case and payment of the price of the documentary credit of this case.

In the same purport, the court below is just in rejecting the plaintiff's claim for damages due to the plaintiff's tort, and there is no error of law by misunderstanding the legal principles as to the occurrence of damages

On the other hand, the plaintiff at the final appeal, on the premise that there was a direct contractual relationship between the plaintiff bank and the defendant bank, the defendant bank is liable for damages on the ground that the defendant bank failed to perform the warranty provision under the New York Uniform Commercial Code, or the defendant bank committed a tort, such as requesting for the extension of maturity of the letter of credit to the plaintiff bank, even though it was unable to pay the price of the letter of credit in the form of an open bid or a joint bid with the L/C issuer and the defendant bank, and thus, it committed a tort. However, there is no evidence to acknowledge the above assertion, and the above assertion cannot be a legitimate ground of appeal for the reason that it was not asserted in the fact-finding court.

3. As to the fourth ground for appeal

According to the provisions of Article 3-410 (1) of the New York Uniform Commercial Act of the United States of America, which shall be applied to determine whether the bill of exchange attached to the letter of credit of this case was duly accepted by the branch of the Defendant bank, the acceptance of the bill of exchange is a signed promise by the underwriter to accept the bill as it is, and it must be entered in the bill of exchange. Thus, it cannot be deemed that the Defendant bank merely notified the Plaintiff bank of the acceptance of the bill of exchange without signing the bill of exchange on the purport of acceptance.

In the same purport, the court below is just in rejecting the defendant's request for a bill of exchange prohibition based on acceptance, and there is no error in the misapprehension of legal principles as to the acceptance of bill under the New York Uniform Commercial Code.

4. 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 on the bench.

Justices Byun Jae-chul (Presiding Justice)