ABSTRACT
The background to this paper is a judgment handed down by the Court of Appeal in October 2014 in the case of The Erin Schulte. 1 The case raises and deals with a number of issues which arise in the not-uncommon situation where a bank wrongly rejects (that is dishonours) a valid presentation under a letter of credit (LC). In particular, the case –
provides a salutary lesson in relation to the dangers of the common practice in the oil trade of issuing Letters of Indemnity (letters of indemnity) to facilitate the discharge of cargo other than against presentation of bills of lading;
clarifies the status of bills of lading indorsed to the LC issuing or confirming the bank as part of a presentation under a LC; and
clarifies the options open to the beneficiary upon dishonour of the LC and the consequences of a beneficiary’s election as to how to proceed in the face of such dishonour.
