1.
Introduction
Often I had wished that I were a fly on the wall, had a
voice recorder in place to record the deliberations, or could browse through
the background papers and notes while the first ever UCP was being drawn up
nearly 80 years ago. Tapping into the minds of the first ever drafting group
could have been a revealing experience. For, very recently, while trying to
understand the true meaning of the term “negotiation” and a few other
provisions of the UCP, the question that I repeatedly asked myself was, “Does
the UCP have its roots in the laws of contract?” For, there were certain
inescapable similarities between the articles of the UCP and the laws of
contract. I am not a member of the legal profession, neither qualified in
matters of law. Yet, even to a layman like me, the similarities became so
compelling that I decided to put my thoughts on paper. My initial effort
resulted in a paper published in DC Insight[i].
I based that paper on the Indian Contract Act, 1872. However, since the Indian
Contract Act (ICA) was formulated by the British, I looked for the original
English Act to use it in my analysis. To my surprise I learned that, even
today, there is no English law equivalent to the Indian Contract Act 1872
(ICA).
The ICA appears to be basically a codification of the
English Common Law (contd....)
[i] Negotiation and the laws of contract, DC
Insight, Vol. 16, No. 2, April-June 2010.
[ii] Issued by the
United Nations Commission on International Trade Law, United Nations, New York,
2010.
[iii] Articles 15(2)
and Article 16 of the CISG reflect similar approach to revocation.
[iv] Does this provide
grounds enough for modifying Articles 2 and 4 of the ISBP to create a level
playing field?
[v] The
expression ‘promisee’, describing the issuing bank - the original promisor or
proposer – in this particular context, is derived from the title to Section 52
viz., “Order of performance of reciprocal promises”, and sub-section 2(e) of
the ICA (“Every promise and every set of promises, forming the consideration
for each other…”.
[vi] “…Silence or inactivity does not in itself amount to acceptance”, states Article 18(1) of the CISG.
[vii] ICC Official
Opinion R520 / TA543 rev2 - Unpublished Opinion 1995-2004.
[viii] DC Insight, Vol. 17, No. 1, Jan-March
2011.
[ix] An agreement,
valid in law, is defined as a contract. In places, I have used the terms
interchangeably for the limited purpose of this article.
[x] Article 3 of the Uniform Rules for Collection, ICC Publication No. 522.
[xi] Refer to my
articles Negotiation and the law of
contract, DC Insight, Volume 16, Issue 2, April-June 2010, and Re-defining negotiation, LC
Monitor-Trade Services Update, Volume 11, Issue 4, July-August 2009.
[xii] This appears to
be a deviation from the principle stated in UCP 500, sub-article 10(b)(ii)
which read as follows: “Negotiation means the giving of value for draft(s) and/or document(s) by the bank
authorised to negotiate. Mere examination of the documents without giving
value does not constitute a
negotiation. (emphasis added)”
[xiii] The definition in
Article 2 of UCP 600 is full of holes. After the publication of my article Re-defining negotiation, in the LC Monitor-Trade
Services Update, Volume 11, Issue 4, July-August 2009, I was hoping to receive
very strong, specific, point-by-point rebuttal of the points I had made
therein. Surprisingly, I have received absolutely none till date.
(Incidentally, has anyone ever wondered why, since the first UCP was released
in 1933, the term “negotiation” has defied a universally acceptable
definition?)
[xiv] Review of the recent Swiss Supreme Court
decision (Emirates Bank International v. Credit Lyonnais (Suisse) S.A., Decision
1 June 2004, Tribunal Federal) on deferred payment credit from a comparative
commercial law perspective, Chang-Soon Thomas Song, 10 May 2005.
[xv] Sub-article 12(b)
was inserted in UCP 600 to address the issues raised by the courts on deferred
payment credits.
.
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