| A credit is requesting an experts' inspection certificate and the seller was notified that the advising bank is "ANZ Bank". The seller submitted a false inspection certificate that fits the credit to the opening bank. When received shipping documents, the debtor rejected to meet payment declaring that the quality of the product is not conforming to the sample as per a expert's inspection. For this, the negotiating bank demanded for the payment declaring the shipping documents conforms to the credit terms however, the demand was not fulfilled and dispute has occurred.
Case study
1. Payment rejection based on the quality of products.
Since the transaction is based on the document, not on a product in doing a credit transaction, the payment rejection can not be accepted unless there is a problem with the documents. The No. 4 of Uniform Rules for contract Guarantee stands as a ground for this matter. Such a principle is referred as "Abstraction Principle of the Credit"
2. Payment rejection after custom clearance
Payment rejection is not acceptable once the products passed custom clearance. Because in order to reject payment, you need to return the document to the seller but you need to submit the document to a freight company also to clear the custom.
3. Conclusion
In this case, you can not reject payment grounded on the credit and the purchaser would have to institute a lawsuit against the seller based on the sales contract. You can not put liability on the opening bank either.
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