Letters of Credit and The Independence Principle

Abstract

Although letters of credit are perhaps the most widely used tool in international trade, it is surprising how many people including traders get confused in some of the essentials of letters of credits. Nearly all letters of credit are governed by the (UCP) the Uniform Customs and Practices.1 This thesis discusses the independence principle, beginning with its history and development of the letter of credit in the first chapter. Followed by a definition and an explanation of the independence principle in the second chapter. The third chapter discusses the exceptions to the independence principle, starting with the fraud exception following its development in the United States of America and the United Kingdom with a comparison between the two. Unfortunately, there are few reported cases on letters of credit in the Sudan. For this reason, no comparison between the law in Sudan and the law in the jurisdictions referred to above as regards to letters of credit can be made. This is followed by the discussion of the illegality and the mistake exceptions. The fourth chapter (chapter 4) sets forth the conclusions to be drawn from the discussions in the previous chapters.