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EXCERPT OF JUDGMENT - TRANSLATION Ng Nam Bee (Singapore) Pte Ltd. v. Tay Ninh Trade (SOE) Co (No. 28/ KTPT): due to quota's restriction. Tan Loc Pte Corp. signed a 'uy-thac contract' with Tay Ninh Trade Co (SOE, abbreviated as Tanico) to export 300 tons of monosodium glutamate, value of $ 312,000 f.o.b. Quy Nhon (Vietnam) to a Singapore partner, Ng Nam Bee Pte. Ltd. On 2nd Jan. 1995 Tanico signed a sale contract with Ng Nam Bee, according to which payment shall be made by a irrevocable letter of credits (L/C) red clause (i.e. 50% downpayment before the presentation of document available). Time of delivery is any time up to 28th Feb. 1995. The contract also included a 'four-corner clause'. On 5th Jan. 1995, Ng Nam Bee issued an irrevocable L/C, red clause, valid until 15th March. On 21st Jan. 1995 the red clause was realized (i.e. $ 156,000). - On 28th Feb., the last day of contract performance, Ng Nam Bee sent an amendment of L/C No. 2, prolonged the validity of L/C until 4th April 1995. In the L/C, Ng Nam Bee also postponed the date of delivery until 20 March. The corresponding bank received the amendment on 1st March and sent it to Tanico, which received it on 2nd of March. It again on 8 March sent the amendment to Tan Loc. On the other hand, Tan Loc after waiting until 4 March, considered the contract rescinded and sent back the downpayment to Tanico in order to give it back to Ng Nam Bee. On 9 March upon receive the amendment, Tan Loc terminated the contract, declared Ng Nam Bee was in breach as if the contract failed to take the delivery. - On 10 March Ng Nam Bee sent 2 facsimiles, confirmed that M/V Hei Hu Quan would arrive at Quy Nhon evening 11 March. The vessel arrived at Quy Nhon on 13th March in vain. Ng Nam Bee sued for damages. Ng Nam Bee alleged that in the first L/C, it imposed a clause, stated that the issuer reserved the right to change the shipment time. The question to the case is whether the clause could be construed as binding between the parties. Held, for the defendant. The Court rejected the argument of the plaintiff The 'four-corner' clause in the main contract reflected intention of the parties to preclude the use of extrinsic evidence. The letter of credit by its nature is an instrument of payment, a type of extrinsic evidence and cannot prevail over contract terms. The content of L/C must be also be consistent with the contract. The alleged clause in this case is construed as an offer, waiting for acceptance from the beneficiary. However, it has been rejected clearly by Tanico, so it has no binding force. Moreover, the conduct of the seller is reasonable, since monosodium glutamate is a delicate good, its quality and quantity could easily be destroyed due to a prolonged time storage. Trade usage also requires shipment on time, avoid damages to the parties. The buyer was in breach Art. 7 of the contract, Art. 16, 21, 26 of the O. E. C., rules 9 par. D and I of the UCP letter of credits, articles 29, 53, 61 (3) and 64 (1) al. a CISG. According to Art 64 CISG, in case of the breach of the buyer, the seller has the right to rescind the contract. [...] Translation from Vietnamese by Dr. Le Net, Lecturer, National University of Ho Chi Minh City, Vietnam. |