September/October at a price of 262 Kenyan shillings per hundredweight. The terms of the contracts also required payment in that currency to be confirmed by an irrevocable letter of credit. The letter of credit was opened, but it confirmed payment in pound sterling, which at the time was in parity with the value of the contract prices in Kenyan shillings. Subsequently, the seller drew on the credit in relation to the first of the two contracts. Between that time and performance of the second contract, the pounds sterling was devalued with the result that there was a large discrepancy between payment in pounds sterling and payment, as envisaged by the contract, in Kenyan shillings. The Court of Appeal held that the seller, by acting on the irrevocable letter of credit in the first instance had waived the right to have payment in Kenyan shillings with the result that the seller’s appeal was dismissed: WJ Alan & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189, CA, p 212

doi:10.4324/9781843141518-229

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September/October at a price of 262 Kenyan shillings per hundredweight. The terms of the contracts also required payment in that currency to be confirmed by an irrevocable letter of credit. The letter of credit was opened, but it confirmed payment in pound sterling, which at the time was in parity with the value of the contract prices in Kenyan shillings. Subsequently, the seller drew on the credit in relation to the first of the two contracts. Between that time and performance of the second contract, the pounds sterling was devalued with the result that there was a large discrepancy between payment in pounds sterling and payment, as envisaged by the contract, in Kenyan shillings. The Court of Appeal held that the seller, by acting on the irrevocable letter of credit in the first instance had waived the right to have payment in Kenyan shillings with the result that the seller’s appeal was dismissed: WJ Alan & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189, CA, p 212

ABSTRACT

All that I have said so far relates to a ‘conforming’ letter of credit; that is, one which is in accordance with the stipulations in the contract of sale. But in many cases – and our present case is one – the letter of credit does not conform. Then negotiations may take place as a result of which the letter of credit is modified so as to be satisfactory to the seller. Alternatively, the seller may be content to accept the letter of credit as satisfactory, as it is, without modification. Once this happens, then the letter of credit is to be regarded as if it were a conforming letter of credit. It will rank accordingly as conditional payment.