Maritime Fraud and the Banks
Documentary credits are expensive, and can be slow, and where the parties are familiar with each other, probably unnecessary. In Europe and America, and in the main container ports, such as Singapore and Hong Kong, there has been a steep decline in documentary credits. Open account sales are suitable only where the trading parties are acquainted with each other, since they cannot afford the parties the security of the traditional documentary credit, though in developed and reliable markets, credit insurance may provide adequate protection.3 It may be that the fraud risks in such markets tend to be relatively low. Documentary credits remain well-adapted to transactions where unfamiliar parties deal with each other at a distance, where the security of a document of title is required, and where re-sales at sea are envisaged, in short, for the traditional fob and cif contract. Documentary credits might therefore be expected to continue to thrive in more difficult markets, where the quest for safety is seen as more crucial.