Scribd Logo
Upload

Welcome to Scribd!

  • 211 views

    Harbottle V National Westminster Bank LTD

    Uploaded by

    mudiyamubarak
    This landmark 1978 case clarified that a bank has an absolute obligation to pay under an irrevocable letter of credit, even if a dispute arises between the buyer and seller. The case involved a buyer, RD Harbottle, that tried to stop payment after disputing with the seller. The court ruled in favor of the bank, National Westminster, establishing that courts will generally not interfere with payment under irrevocable letters of credit unless fraud by the beneficiary can be proven. This emphasized the independence of letters of credit and promoted certainty in international trade finance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Harbottle V National Westminster Bank LTD

    Uploaded by

    mudiyamubarak
    211 views2 pages
    This landmark 1978 case clarified that a bank has an absolute obligation to pay under an irrevocable letter of credit, even if a dispute arises between the buyer and seller. The case involved a buyer, RD Harbottle, that tried to stop payment after disputing with the seller. The court ruled in favor of the bank, National Westminster, establishing that courts will generally not interfere with payment under irrevocable letters of credit unless fraud by the beneficiary can be proven. This emphasized the independence of letters of credit and promoted certainty in international trade finance.

    Original Description:

    For students doing law

    Original Title

    Harbottle v National Westminster Bank Ltd

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This landmark 1978 case clarified that a bank has an absolute obligation to pay under an irrevocable letter of credit, even if a dispute arises between the buyer and seller. The case involved a buyer, RD Harbottle, that tried to stop payment after disputing with the seller. The court ruled in favor of the bank, National Westminster, establishing that courts will generally not interfere with payment under irrevocable letters of credit unless fraud by the beneficiary can be proven. This emphasized the independence of letters of credit and promoted certainty in international trade finance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    211 views2 pages

    Harbottle V National Westminster Bank LTD

    Uploaded by

    mudiyamubarak
    This landmark 1978 case clarified that a bank has an absolute obligation to pay under an irrevocable letter of credit, even if a dispute arises between the buyer and seller. The case involved a buyer, RD Harbottle, that tried to stop payment after disputing with the seller. The court ruled in favor of the bank, National Westminster, establishing that courts will generally not interfere with payment under irrevocable letters of credit unless fraud by the beneficiary can be proven. This emphasized the independence of letters of credit and promoted certainty in international trade finance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    Harbottle v National Westminster Bank Ltd (1978)

    Harbottle v National Westminster Bank Ltd (1978): A Pillar of International


    Trade Finance

    Background:

    Letters of Credit (LCs) are crucial instruments in international trade, acting as a


    guarantee of payment for sellers. Prior to Harbottle, there was some uncertainty
    about the absolute nature of a bank's obligation under an irrevocable LC. This case
    provided much-needed clarity.

    Facts:

     RD Harbottle (Mercantile) Ltd (Harbottle) applied for a letter of credit from


    National Westminster Bank Ltd (the Bank) to finance a shipment of goods.
     The letter of credit was irrevocable, meaning the Bank was obligated to pay
    the seller regardless of any disputes between Harbottle and the seller.
     A dispute arose between Harbottle and the seller after the letter of credit was
    issued. Harbottle tried to stop the Bank from making payment.

    Issue:

     Can a court intervene and prevent a bank from honoring an irrevocable letter
    of credit, even if there is a dispute between the buyer and seller?

    Significance:
    This case is a landmark decision in the world of international trade finance. Letters
    of credit are essential tools for facilitating trade because they provide a guarantee
    of payment to sellers. A court's ability to easily overturn these guarantees could
    disrupt international commerce.

    Held:

     The court ruled in favor of the Bank. They established that courts will
    generally not interfere with irrevocable letters of credit, even if there are
    disputes between the buyer and seller.
     The only exceptions are for cases of "fraud" where the bank has knowledge
    of it, or if it can be "clearly established" that the beneficiary (seller) is not
    entitled to payment.

    This decision emphasizes the importance of the independence and autonomy of


    letters of credit in international trade. It promotes certainty and reliability in these
    transactions.

    You might also like