International Business Transaction and Law-myassignmenthelp.com

Question: Discuss about theInternational Business Transaction and Law for LT Bank. Answer: It is apparent from the case that LT Bank was negligent in its actions as the bank had already known the financial position of AAT and yet went ahead to issue a letter of credit that indicated the AAT was able to pay for the shipment and yet AAT was in a precarious financial position. According to International business transaction law, a carrier cannot deliver goods in the conditions which are not in the provisions of the bill of lading (Chow, 2015). By offering a letter of credit to AAT, the bank put itself in a situation in which compromised its ability to get payment from the AAT for the goods that were delivered. More so, the goods were not in the condition stipulated in the bill of lading (Pubali Bank v. City Nat'l Bank). When GEC realized that it could not deliver the goods according to the bill of lading, LT bank should not have offered to honor the letter of credit. It should have revoked it since the AAT was not in a financial position to honor the letter of credit. This was subject to what the bank knew about ATTs financial position. Delivery of the pressurized rice-cookers against the provision of the bill of lading makes the bank and the carrier responsible for the financial or tort liability caused by the contract. Even though a carrier is entrusted to deliver goods according to the provision of the bill of lading, it is evident that when a bank offers a letter of credit, it was guaranteeing that payment will be made by the AAT (Chow, 2015). In this scenario, the bank was well aware of the financial position of the AAT and the therefore the commitment to offer a letter of credit to the AAT meant the bank was ill-informed about the consequences of the deal if the company that was buying the shipment became bankrupt, as the bank had initially realized (Pubali Bank v. City Nat'l Bank). The tort of liability, in this case, is to the bank and the carrier. Since a contract for the sale of goods had been struck by the GEC, an Australian manufacturer and the AAT, and the bank committed to honor the letter of credit, i t is apparent that the bank has the responsibility of meeting the obligations under the maritime international business transaction and the law of ensuring the letter of credit is honored (Chow, 2015). After that, the bank will have to seek legal redress in an international court or national court to seek compensation from the carrier so that it is paid damages if the case is successful. In this case, the bank is in a quagmire since the non-performance of the contract by the carrier is not part of the contractual relationship with the AAT and the letter of the credit contract. This implies the bank should meet its financial obligation to the GEC, an Australian manufacturer and then look for legal means for being paid damages by the carrier (Chow, 2015). Under the maritime international business transaction law, non-performance of a contract is not something that is rare. Since the documents that were presented by beneficiary complied with the provisions of the international business transaction and the law of contract, according to international standards, it evident the bank's defenses for failing to honor the letter of credit may be futile. The letter of credit came into existence international business transaction law as a way of making sure the issuer has the duty to pay the beneficiary independently as long as the documents that were used to make the bank offer the letter of credit was valid (Chow, 2015). In this case, the banks liability is to pay the GEC since, as a matter of principle the letter of credit holds that once goods are delivered the buyer, the seller who is the beneficiary should be paid by the bank. The independence principle between the AAT, GEC, and the issuer of the letter of credit is what makes the bank have the liability to honor the letter of credit. The letter of credit was also put in place to protect GEC, the Australian manufacturer from the AATs insolvency and as such since the bank knew that the buyer was not in a good financial position, the bank should not have issued the letter of credit (Harris Corp. v. National Iranian Radio Television). The Australian manufacturer, in this case, is a prospective litigator in the case, and the bank will have to pay for the shipping of the pressurized rice-cookers as long as the goods were delivered with a valid bill of lading. Even though the letter of credit is aimed at cushioning the GEC from fraud and insolvency of the AAT, the issuer, in this case, the bank has the bulk of liability to pay the GEC, the Australian manufacturer for the delivery of pressurized rice-cookers. The banks position, in this case, is to look for reimbursement from the AAT and the carrier for failure to meet the obligations set forth in the international business transaction the law of delivering goods according to the bill of lading (Chow, 2015). The manufacturer s duty to deliver the shipment was confirmed by the documents that were given to the bank, and as such since the bank was satisfied by AAT, the letter of credit is what will cushion GEC and ensure the bank meets the financial obligations to the GEC. It should be noted that the LT bank, in this case, will pay the GEC and ask for reimbursement from AAT through a legal process that is defended by the Uniform Union Code. By honoring the letter of credit, the bank will not have breached its duty to the GEC, but it will have to seek for reimbursement since the buyer acted in bad faith and did not offer good reasons why they may be insolvent and not able to meet the obligations of the carrier (DiMatteo, 2016). A bank is required to comply with the requirements on the face of the letter of credit, and in this case, LT Bank has no option to but pay the GEC for the delivery of the goods whether the goods were in good condition or not. The banks tort liability to pay the letter of credit is based on the fact that it accepted documents that may have been forged since the documents that made it issue the letter of credit did not show the correct financial position of the AAT (DiMatteo, 2016). The bank also had information about the buyers financial status which was dwindling, and in a such a case it should not have issued the letter of credit. As the issuing and confirming bank in the case, LT Bank is liable to make sure the GEC, the Australian manufacturer is paid for the delivery of the goods and after that bring an international business transaction lawsuit to the AAT and the carrier (Harris Corp. v. National Iranian Radio Television). As the issuing and confirming bank for the letter of credit, the bank should have made sure it understands the financial position of the AAT before issuing the letter of credit (DiMatteo, 2016). The confirming bank, in this case, deals directly with the beneficiary and is therefore in an excellent position to know the financial status of the beneficiary and should have advised LT Bank the whether the beneficiary can meet their obligations as outlined in the letter of credit. The bank, in this case, was a guarantor to the AAT, and as such, failure to meet its obligations as set for them in the letter of credit amounts to a breach of contract. This means that it will be liable for damages when sued by the GEC for failing to meet the obligations outlined in the letter of credit (Dann, 2008). Despite its concerns about AATs financial situation, LT Bank issued the letter of credit, something that makes the bank have full responsibility to pay the GEC, once the goods were delivered. As it relates to the carrier, they can also be sued by the bank for wrongful delivery of the goods according to the bill of lading. The bank can argue in this case the carrier is liable to pay financial damages incurred by the bank for the failure of delivering the goods in the right state. The carrier can be sued for failing to meet the contractual obligations relating to the duty of care when they delivered goods that were rendered useless by the AAT. In the international business transaction lawsuit to the carrier, the bank will argue that the carrier failed in the responsibility to ensure the goods reached the buyer in excellent condition. According to the international business transaction law on the transit of goods by ship, the carrier can have a concurrent liability with the buyer in cases where the goods delivered did not meet the standards established in the bill of adding. The scenario makes the carrier culpable for delivering pressurized rice-cookers in lousy condition, something that led to financial obligations to the bank. The carrier of the goods was conversant with the provisions of the bill of landing. The carrier in total disregard of the provisions, however, went ahead to dishonor the conditions set in the bill of landing and other documentation. The bill of landing together with other documentations outlined the role of the carrier which was to deliver goods to AAT in good condition. References Chow, C., K., D. (2015) International Business Transactions: Problems, Cases, and Materials. New York: Wolters Kluwer Law Business. Dann, F., D. (2008) Confirming Bank Liability in Letter of Credit Transactions: Whose Bank Is Anyway. Fordham Law Review, 51 (6), 12-19 DiMatteo, A., L. (2016) International Business Law and the Legal Environment: A Transactional Approach. London: SAGE. Harris Corp. v. National Iranian Radio Television, 691 F.2d 1344, 1346 (11 the Cir. 1982) Pubali Bank v. City Nat'l Bank, 676 F.2d 1326, 1329-30 (9th Cir. 1982)