Contractual Relations Between Parties to the Contract of Letter of Credit

Our study theme focuses on the Letter of Credit , as it is one of the banking operations that played and is still playing a great important commercial and economic role at international commercial and economic role at international commercial level. And due to the lack of legal studies on this theme, I handled in my study an important aspect of the Letter of Credit, that is the Legal Relation which connects the relevant parties to each other based on the following international publications : ·The United Rules Group of International security Practices (ISP), Buletin No. 590 issued in 1998 by the International Chamber of Commerce in Paris, which entered into force as from 1st January, 1998. ·United Nations Convention (UN Convention) of independent Warranties and security, of 1996. ·The United traditions and Conventions Group of Letters of Credit, UCP Buletin No. 500 issued in 1993 by the International Chamber of Commerce in Paris, which entered into force as from 1st January, 1994 . The contents of my study included three major chapters divided into subjects, requirements and sections. In my study, I handled the Letter of Credit and its legal organization implying jurisprudent, legislative and judicial opinions. if I want to give a comprehensive legal definition for the approach to the Letter of Credit, I find in dr. Jorgeit's definition the inclusiveness of definition, as she defined it as a written undertaking issued by a bank called the issuing bank addressed to the seller who is called "The beneficiary", according to the buyer's request who is called the ordering client; in it, the bank undertakes to pay to the beneficiary a certain sum of money when the beneficiary submits the documents which are mentioned in the letter addressed to him, and this letter is called, " he Letter of Credit", during the period specified in it. The contract of the Letter of Credit is independent from the sale contract which is made according to it, as well as from all relations resulted from the operation of the Letter of Credit. Then I presented its importance, benefits and characteristics with which it is distinguished from other contracts. I also handled the cases which show the law that should be applied on the contract of letter of credit. We also have not forgotten to mention the most important documents which should be included in the Letter of credit such as ( the commercial invoice, bill of lading, insurance policy, certificate of origin…etc), and their compliance with the provisions of the Letter of Credit, and the terms which are used in the international commerce in accordance with the rules issued by the International Chamber of Commerce in Paris (ICC) . As it has been dealt with since ancient times, several types of it appeared and it has been divided into traditional and modern types as follows: -The Irrevocable Letter of Credit and Revocable Letter of Credit. -The Enhanced and Non-Enhanced Letter of credit. -The Transferable Letter of credit. -The payable at Sight Letter of credit; Acceptance Letter of credit and Deferred payment Letter of Credit. -The Totally and partially Transferred Letters of credit. -The Security Credit. -The open credit and restricted credit. Then we mentioned the most important principles on which the contract of Letter of Credit is based; the most important principles are the independence of the contract of the Letter of Credit, the principle of apparent coincidence of the documents. Then we mentioned the parties to the contractual relation; the Bank, the ordering client and the beneficiary; and I briefly explained the impacts and obligations of each one of them towards the other and the results of breaching such obligations. But in discussing the legal nature of the Letter of Credit we only discussed the jurisprudent theories which contradicted each other in specifying this legal base. We also discussed briefly the theory of single will, the agency theory, the guarantee theory and the theory of provisions for the benefit of others . Then we concluded with the adaptation of the legal nature of the contract of the Letter of credit , as it is a promise of contracting after giving it the characteristic of abstraction. Then we studied the impacts of the contractual relations on the parties to the Letter of credit by explaining the obligations of each party and the relation of the relevant parties with the intermidiator banks.