Critically analyse the decision in the House of Lords' decision in the American Accord

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[...] As per Lord Denning in the American Accord case. See supra, note 3. Introduced in 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. See also www.brettonwoodsproject.org [17]See Xiang Gao, Fraud rule in the law of letters of credit: a comparative study,” 2002, Kluwer Law International Urquhart Lindsay v Eastern Bank [1922] 1 KB 318 and Hamzeh Malass v British Imex [1957] Lloyds Re 549 [1958] Q.B [1978] 1 Lloyd's Rep 166. Supra, note 16. [...]

[...] Despite the diverse approaches, the QBD decision in the American Accord and the reasoning in the higher courts later on, demonstrate the universal principle that fraud must be known to the bank before payment[25]. There also seems to be an indication that the beneficiary who presents the document must also be aware of the fraud, which seems to go against the whole purpose of fraud to prevent benefit from inequitable conduct[26]. Mocatta made further references to Lord Denning's wide approach and went further to assert that there: “Seems to be nothing in the authorities to prevent a confirming bank from raising the issue of fraud as a defendant after having refused to pay on the presentation of the documents.” Mocatta did not however go as far as extending the exception to cases where there was merely a material inaccuracy in the documents. [...]

[...] Under the HOL decision in American Accord, banks are now left in an uncertain position and left with the obligation to make payment irrespective of fraud, if the beneficiary is unaware of the fraud. Bibliography 1. Dolan, John law of letters of credit: commercial and standby credits” Revised Edition, Arlington VA: A.S. Pratt & Sons Dr Johan Schelin, “Letters of Credit and the doctrine of Strict Compliance- Thesis” See Goode ,“Commercial 3rd Edition 2004, Butterworths R.I.V.F Bertrams, “Bank guarantees in international trade: the law and practice of independent (first demand) guarantees Xiang Gao, Fraud rule in the law of letters of credit: a comparative study,” 2002, Kluwer Law International Charles del Busto, Guide to documentary credit operations for the UCP ICC Publishing International Chamber of Commerce, Uniform Customs and practice for documentary credits and supplement to UCP 500 for electronic presentation (eUCP), version 1.0 International Chamber of Commerce” ICC Publishing Rolf A. [...]

[...] In order the further analyse the effect of the American Accord decision on the fraud exception, I feel it is necessary to discuss the decision of Justice Mocatta in the first instance in the Queen's Bench Division, who separated the hearings on the two aspects of the matter, namely the fraud exception, which was considered in context of established case law and the exception based on Britain's obligations under the commercial Bretton Woods' agreement[16]. The Facts The second plaintiff (Glass Fibres) entered into a contract with the first third party (Vitro) to manufacture equipment for Vitro. [...]

[...] This analysis examines letters of credit in international sale transactions, focusing on the concept of strict compliance and the fraud exception particularly in context of the House of Lords' decision in the case of United City Merchants (Investment) Limited and Glass Fibres and Equipment Limited v. Royal Bank of Canada Vitroreuerzos S.A. and Banco Continental S.A. [1983] AC168 American Accord”). This decision focused on the defences available to banks who wish to avoid making payment in terms of a letter of credit, based on the underlying transaction between applicant and beneficiary of a letter of credit. [...]