[1] The case holding that the payment condition of a letter of credit, which is a condition for the payment of the principal letter of credit, constitutes a non-documentary special condition in which the fulfillment of the conditions cannot be determined by the attached documents, and thus, cannot be deemed as invalid under the principle of private autonomy

[2] The purport of Article 16 or 14 of the Uniform Customs and Practice for Documentary Credits (UCP 4000) provides that where an issuing bank intends to refuse to accept a document on the ground of a disagreement in the presented document, the issuing bank shall, without delay, notify the presenter of the disagreement and return the document, etc., the issuing bank shall lose its right to claim that the document does not comply with the conditions

[3] In a case where the negotiating bank presented a letter of credit and a bill of exchange to the issuing bank, but it is confirmed that the special conditions added to the letter of credit will not be fulfilled, etc. does not occur, whether the issuing bank's duty to return the letter of credit documents (affirmative with qualification)

[1] The case holding that the payment condition of a letter of credit, which is subject to the payment of the principal letter of credit, constitutes a non-document-specific condition that cannot be determined by the attached documents, and thus cannot be deemed as invalid under the principle of private autonomy, although it is not desirable in light of the nature of the letter of credit

[2] The purport of Article 16 or 14 of the Uniform Customs and Practice for Documentary Credits (UCP 4, 600) provides that "if an issuing bank intends to refuse to accept a document on the ground of a disagreement in the document presented, the issuing bank shall, without delay, notify the presenter of the disagreement and return the document, 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." This does not merely mean that even if there is a disagreement in the document presented by the letter of credit, if the issuing bank does not take measures such as notifying the presenter, the issuing bank shall not claim the disagreement and bear its obligation to pay the price according to the original terms and conditions of the letter of credit. Thus, the beneficiary of the letter of credit or negotiating

[3] Where the negotiating bank presented the letter of credit documents and the bill of exchange to the issuing bank, but the obligation to pay the price of the letter of credit does not arise due to the confirmation that the special condition added to the letter of credit is not fulfilled, the issuing bank's duty to return the presented documents shall not be stipulated in the Uniform Customs and Practice for Documentary Credits, but if the presented documents are defective, the issuing bank shall keep the presented documents for the presenter or return them to the presenter. In light of the provisions of Article 14 (d) of the Uniform Customs and Practice for Documentary Credits and Practice for Documentary Credits, in principle, the presented documents shall be returned to the presenting bank unless there are special circumstances that the presenter, etc. has renounced the right to claim the return of the

[1] Article 105 of the Civil Code / [2] Article 16 and Article 14 of the Uniform Customs and Practice for Documentary Credits / [3] Article 14 of the Uniform Customs and Practice for Documentary Credits / [3]

[1] [2] Supreme Court Decision 98Da35037 delivered on June 9, 200 (Gong2000Ha, 1593) / [1] Supreme Court Decision 98Da4743 delivered on May 30, 200 (Gong200Ha, 1522)

National Bank of Korea (Attorney Lee Jung-won, Counsel for defendant-appellant)

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

Seoul High Court Decision 98Na11187 delivered on January 28, 2000

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

We examine the grounds of appeal.

1. As to the misapprehension of legal principles as to the validity of non-documentary special conditions of the credit

A. Review of the reasoning of the lower judgment and the record reveals the following facts.

(1) The structure of the instant trading business

(A) On its investment around 1993, the non-party Pakistan Co., Ltd., a manufacturing company of leisure goods (hereinafter referred to as "steinium"), established the non-party Steinium LITD (hereinafter referred to as the "subsidiary") on the non-party Steinium's own investment in Bangladesh, and then exported ordered products from U.S. import from the U.S., after supplying raw materials necessary for manufacturing the product, produced the product by using the raw materials, and was engaged in export business by directly transporting the product from the domestic company to the U.S. import. Accordingly, the payment of the raw materials for the goods of the company was completed, and the export price was recovered after the finished production and export price was recovered.

(B) Under the above transaction structure, first of all, if the U.S. import bank requested the bank to issue a letter of credit with the sight payment condition with its subsidiary as beneficiary, and the issuing bank notifies the subsidiary through the defendant's subordinate point (the letter of credit opened as above shall be accompanied by the letter of credit), and the subsidiary company shall request the bank to issue a letter of credit with the term of 180 days (the above export price shall be paid as the export price after recovery of the export price) after sighting the defendant's raw materials necessary for the production of the above letter of credit to the defendant's subordinate point, and the defendant's point shall be 180 days (the above letter of credit opened as above shall be paid as the price for the letter of credit) after sighting the beneficiary to be supplied with the raw materials necessary for the production of the goods under the above letter of credit from the surry.

(C) After shipping the raw materials into the Republic of Korea, the Plaintiff requested the Plaintiff, a bank bank, to purchase the white L/C with the shipping documents, and the Plaintiff purchased it, confirmed whether to accept the white L/C with the shipping documents, the issuing bank, and then sent the shipping documents together with the shipping documents, the Defendant Qualcomm Branch shall deliver the above shipping documents to the subsidiary and have the subsidiary take over the raw materials. The subsidiary shall, after completing the shipping of the products to the United States, request the purchase of the main L/C with the shipping documents after manufacturing the products and exporting them to the United States, and the purchase of the main L/C with the shipping documents shall be completed, and the settlement shall be completed if the purchase was sent to the main L/C issuing bank located in the United States and received the payment from the Plaintiff.

(2) the issuance of a letter of credit and a white documentary credit;

(A) A local subsidiary entered into a contract under which she will export her mother and child, etc. to California, California, California, for the purpose of paying its import amount, and the said crocate, requested the her bank to the Korea Exchange Bank (Korean Exchange Bank, ② Poscian International Bank, ③ Duscles branch of the Japanese Bank, and ③ the branches of each of the above banks (which are divided into three letters of credit by dividing the entire revenue into three parts) and notified the local subsidiary through the Defendant’s B&S branch.

(B) After receiving the notice of the issuance of each of the above main letters of credit, the local subsidiary decided to import the raw materials of the goods from Pakistan, and requested the establishment of a white letter of credit at the Defendant Kumsan Branch for the settlement of the price. Accordingly, the Defendant Kumsan Branch issued each of the cancelled letters of credit which covers the beneficiary three times as a security for the above main letters of credit.

(3) A special condition of the white L/C.

Under the title of the "Refunding bank", the defendant shall, on the maturity of each of the above white letters of credit, forward the letter of credit at the request of the negotiating bank for the payment of the bill of credit. However, the corresponding letter of credit shall be paid on the condition that the export amount is paid in accordance with the corresponding letter of credit established by the corresponding issuing bank, and the shipping documents corresponding to all the white letters of credit shall clearly indicate that the corresponding letter of credit is the revenue related to the principal letter of credit.

B. According to the above facts, although the terms and conditions of the instant white documentary credit as a condition for the payment of the principal documentary credit constitute a non-documentary special condition, the contents of the terms and conditions can not be determined by the documents attached to the white documentary credit, it is concluded that the parties to the instant white documentary credit, including the beneficiaries, agree to comply with the terms and conditions. Furthermore, the above special terms and conditions can be seen as being able to be fulfilled at any time by allowing the parties to the instant white documentary credit, which are the beneficiaries of the instant white documentary credit, to ship and send export goods agreed upon to the U.S. import to the U.S. subsidiaries, and then the Defendant cannot be viewed as being able to have fulfilled its duty to establish the white documentary credit and to receive the delivery documents from the main bank of the instant white documentary credit, in light of the following facts: the establishment of the white documentary credit and the non-document special condition inserted therein; the Plaintiff cannot be viewed as being able to have fulfilled its duty to establish the special documentary credit as valid, non-self-government, and thus, it cannot be viewed as valid.

Nevertheless, the court below held that although the above special condition stated in the white documentary credit of this case is contrary to the essence of the irrevocable documentary credit under the Uniform Customs and Practice for Documentary Credits, even though each of the above white documentary credit uses the name of the irrevocable documentary credit of this case and there is a provision that the 4th or 5th Uniform Customs and Practice for Documentary Credits applies, it cannot be deemed as belonging to the category of the irrevocable documentary credit of this case, and it is a special agreement between the parties taking the form of an impossible documentary credit of this case and there is no obligation to pay the 00 documentary credit of this case unless the principal documentary credit is paid in accordance with the special agreement between the above parties. The court below erred in misunderstanding the validity of the non-document special condition of the 00 documentary credit of this case, but as a result, it is justified in the conclusion that the plaintiff's claim of this case was dismissed since the 00 documentary credit of this case did not have the obligation to pay the 00 documentary credit of this case before the fulfillment of the special condition.

2. Regarding the misapprehension of legal principles as to the loss of defense right under Article 16 or 14 of the Uniform Customs and Practice for Documentary Credits (UCP 400)

According to the records, the plaintiff, who purchased the shipping documents and the bill of exchange in the white L/C containing special conditions as mentioned above, presents the documents to the issuing bank as the issuing bank, and the defendant Kuck branch notified the plaintiff, the issuing bank, the issuing bank of the white L/C, of the purport that the local subsidiary, the issuing bank of the white L/C applicant, upon confirming the due date of the above bills and shipping documents, has accepted the above bill of exchange under the condition that the plaintiff, the issuing bank, would receive the original L/C price as agreed upon. Thus, the defendant, the issuing bank of the white L/C, receives the bill of exchange normally under the original conditions, and it cannot be viewed as a refusal or refusal of the acceptance of the letter of credit, and further, considering the fact that the defendant cannot be determined by the fulfillment of the special conditions in the white L/C of this case until the payment of the price for the main L/C is confirmed, the above conditional acceptance of the letter of credit cannot be viewed as refusing the acceptance of the documents.

In addition, the purport of Article 16 or 14 of the Uniform Customs and Practice for Documentary Credits and Practice for Documentary Credits (UCP 46 or 5th Uniform Customs and Practice for Documentary Credits) provides that "if an issuing bank intends to refuse to accept a document on the ground of a disagreement in the document presented, the issuing bank shall without delay notify the presenter of the disagreement and return the document, the issuing bank shall lose the right to assert that the document does not comply with the conditions of the letter of credit." Even if there is a disagreement in the document presented in the letter of credit, if the issuing bank does not take measures such as notifying the presenter, the issuing bank shall not assert the disagreement and assume the duty to pay the price under the original conditions of the letter of credit. It does not mean that the beneficiary of the letter of credit or the negotiating bank after the letter of credit did not acquire any new right that had not been previously. Thus, the plaintiff, which is the negotiating bank of the letter of credit, can still claim the price of the letter of credit in this case on the condition that the special conditions as agreed upon at the time of the issuance of the letter of credit.

Therefore, the court below's rejection of the plaintiff's assertion, including the special agreement between the parties that exclude the application of the Uniform Customs and Practice for Documentary Credits, is somewhat inappropriate. However, it is justified in rejecting the plaintiff's assertion. Thus, the plaintiff's ground of appeal pointing this out is without merit.

3. As to the misapprehension of legal principles as to the principle of no-competence or the principle of good faith

According to the reasoning of the judgment below and the records, the defendant extended the maturity of about 90 days on the date of the payment of the 00-day L/C of this case, and the plaintiff rejected a request for the second extension of maturity, and further, part of the payment of the L/C of this case was paid as alleged by the plaintiff. However, the above fact that the payment date of the 00-day L/C of this case was extended for the first time with the consent of S/C applicant of the above L/C of this case. The defendant confirmed the plaintiff's intention as the negotiating bank of the 00-day L/C of this case, and then extended the maturity to the plaintiff. Further, the defendant's payment of part of the 00-day L/C of this case was made to the plaintiff without the consent of the plaintiff during the second extension of maturity of the above L/C of this case, and the defendant's payment of part of the 00-day L/C of this case could not be viewed as violating the principle of the principle of the good faith.

The conclusion of the court below's decision to the same purport is just, and there is no error in the misapprehension of legal principles as to the principle of notions or good faith, as otherwise alleged in the ground of appeal. The plaintiff's ground of appeal on this part is without merit

4. As to the mistake of facts or misapprehension of legal principles as to the responsibility for payment as an underwriter of a bill of exchange

According to the reasoning of the judgment below, the court below rejected the plaintiff's claim as to the plaintiff's assertion that the defendant, who is the issuing bank of the white documentary credit of this case, accepted the bill under the above documentary credit of this case, and there is no evidence to prove that the defendant accepted the bill of this case. Rather, according to the evidence, the court below rejected the plaintiff's claim for the above part on the ground that the bill of this case, which is the total manager of the local subsidiary, or the non-party 1 or 2, was stated in the purport of accepting the bill of this case.

In light of the records, the above judgment of the court below is just, and there is no error of law by misunderstanding of facts against the rules of evidence or misunderstanding of legal principles as to the obligor's liability for payment of bills of exchange. The plaintiff's ground of appeal on this part is without merit.

5. As to the misapprehension of legal principle as to the duty to return documents

If the negotiating bank presented the letter of credit documents and the bill of exchange to the issuing bank, but the obligation to pay the price of the letter of credit does not arise due to the confirmation that the special condition added to the letter of credit is not fulfilled, it shall not be stipulated in the Uniform Customs and Practice of Documentary Credits, etc. on the duty to return the presented documents. However, if the presented documents are defective in the letter of credit, the issuing bank shall keep the presented documents for the presenter, or return them to the presenter, by analogy of the provisions of Article 14 (d) of the Uniform Customs and Practice of Documentary Credits, unless special circumstances exist to deem that the presenter, etc. of the presented documents have renounced the right to request the return of the documents.

However, according to the records, when the issuing bank receives the documents of the letter of credit as mentioned above, it is absolutely necessary to deliver them to the applicant's subsidiary prior to the payment of the letter of credit, and allow the applicant to find raw materials in advance. On this point, the above letter of credit is also actively accepted, and the plaintiff, as the negotiating bank, is also based on the bill of exchange 180 days after sight, and as the condition that the export procedure for the main letter of credit is realized, the above facts were known or could have known. Thus, in this case, the beneficiary of the letter of credit does not possess the documents by the issuing bank, regardless of whether the special conditions of the letter of credit were fulfilled, and the plaintiff cannot be viewed as being able to claim the return of the documents of the letter of credit, and even if it does not request the issuing bank to return the documents of the letter of credit to the issuing bank, the plaintiff cannot be viewed as being able to claim the return of the documents of the letter of credit in this case, the issuing bank's right to request the return of the documents of the letter of credit.

Therefore, the court below's rejection of this part of the plaintiff's assertion that it is somewhat inappropriate to state the reasons why the documents subject to return are not specified or that the fulfillment of the special condition of this case can not be determined yet. However, the conclusion that rejected the plaintiff's above assertion is justifiable. Thus, the plaintiff's ground of appeal pointing this out is without merit.

6. Therefore, the appeal is dismissed and all 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 Lee Han-gu (Presiding Justice)