Comparative study of the guarantee of violation of the condition of opening the documentary credit contained in international commercial sale from the perspective of Iranian law and the Convention on the International Sale of Goods

Document Type : Original Article

Authors

1 PhD Student in Private Law, Faculty of Law, University of Qom , Qom, Iran.

2 Assistant Professor of Law, Faculty of Law and Political Science, Shahid Chamran University of Ahvaz, Ahvaz, Iran.

Abstract

Although the validity of the documents from the perspective of the parties to the transaction is in line with the payment of the price and delivery of the transaction documents, there is no connotation to the nature of the unit of credit opened and the condition for opening the lease in the underlying transaction. In some contracts, the performance of the obligation does not occur once, so that by appealing to the court or arbitration, the obligee is obliged to fulfill the obligation. Rather, the execution of a commitment is continuous and composed of several intertwined and complex commitments in such a way that in the condition of opening a letter of credit, the customer must refer to the bank and complete the letter of credit opening application form and deliver it to the bank in this period. Consequently, the letter of credit issued by the bank with the agreement of the parties to the contract, and the deposit of sufficient documents and guarantees with the bank to issue and open another letter of credit is the customer's commitment and the next issue. The fulfillment of such continuous and complex obligations, if not at the will of the customer, is not able to be performed correctly and in an acceptable manner by the obligor. Apart from the main function of letter of credit, since such a condition in the basic transaction is a kind of guarantee for payment of the price by the customer based on the introduction of a guarantor, the guarantee of violation of this condition is the same as the guarantee of violation of the condition of guarantor in Article 243 of the Civil Code is the right to terminate the transaction. The 1980 Vienna Convention provides performance guarantees, including the request for objective performance of the obligation, termination of the contract, reduction of price and compensation for breach of obligations of the seller and the customer. In the present article, by examining the jurisprudence and legal system of Iran, the International Convention on the Sale of Goods seeks to respond to the guarantee of violation of the condition of opening the LC in the basic transaction.

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References

 
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Journal of Comparative Law
Volume 5, Issue 2 - Serial Number 8
October 2022
Pages 199-219

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History

  • Receive Date: 30 November 2020
  • Revise Date: 16 January 2021
  • Accept Date: 15 March 2021

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