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International fraud and documentary credits

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Conclusion

The decisions inCharles andLambie are utterly unconvincing in their treatment of cheque and credit card cases. It is surely inviting trouble to analyse the card-holder’s act of dishonesty against the bank as an alleged obtaining by deception involving the supplier. There may be sound reasons for resorting to criminal sanctions against dishonest card-holders, given the ease and frequency of abuses and the often illusory nature of civil remedies in many cases of abuse. Yet the arguments favouring criminal sanctions have not gone unchallenged, emphasis being placed instead on the need to encourage greater responsibility in the advertising and ready availability of cards.33 It would have been better if the House of Lords had recognised the inappropriateness of the existing deception offences, thereby enabling consideration to be given to the general question of criminality and the creation, if necessary, of a separate offence. The point about cheque and credit cards is that they essentially involve the dishonest breach of a promise made to the bank. Should this give rise to criminal liability or is that an unwarranted extension of the criminal law?34 Unfortunately, the deceptive analysis sanctioned inCharles andLambie completely obscures this important issue.

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References

  1. 1

    United City Merchants (Investments) Ltd. v.Royal Bank of Canada [1981] 3 All E.R. 142.

  2. 2

    [1979] 1 Lloyds Rep. 267.

  3. 3

    [1979] 2 Lloyds Rep. 498.

  4. 4

    Wilson, Smithett & Cope Ltd. v.Terruzzi [1976] Q.B. 683, rejecting the wider definition by Dr. F. A. Mann in his workThe Legal Aspects of Money, London, Sweet & Maxwell, 3rd edition 1971, 441-“…contracts which may affect a country’s exchange resources.”

  5. 19

    Bennett v.Bennett [1952] 1 K.B. 249.

  6. 20

    see Dankwerts J. inBritish Nylon Spinners v.I.C.I. [1955] Ch. 37, 52.

  7. 22

    Discount Records Ltd. v.Barclays Bank Ltd. [1975] 1 All E.R. 1071.

  8. 23

    Establishment Esefka International Anstalt v.Central Bank of Nigeria [1975] 1 Lloyds Rep. 445. Nevertheless academic coment, reflecting the growing number of U.S. authorities, has been plentiful. SeeBenjamin’s Sale of Goods, London, Sweet & Maxwell, 2nd edition 1981, 1184–1185; Schmitthoff,The Export Trade, London, Sweet & Maxwell, 7th edition 1980, 269; Goode, [1980]Journal of Business Law 291; Ellinger, [1981]Journal of Business Law 258; Kozolychyk, “Letters of Credit” inInternational Encyclopedia of Comparative Law, 1979, Vol. IX, Chap. 5; Gutteridge and Megrah,The Law of Bankers’ Commercial Credits, London, Sweet & Maxwell, 6th edition 1979; Elles and Campbell,International Maritime Fraud, London, Sweet & Maxwell, 1981.

  9. 24

    Per Stephenson L. J. at 159.

  10. 26

    Gian Singh & Co. Ltd. v.Banque de l’Indochine [1974] 2 All E.R. 754.

  11. 27

    Discount Records, supra note 22. ContrastSztejn v.J. Henry Schroeder Banking Cpn. 31 N.Y.S. 2d 631 (1941) where, on similar facts, the court found for the seller. However in that case it was necessary for the court to assume that fraud had been proved for the purpose of the proceedings.

  12. 28

    R.D. Harbottle (Mercantile) Ltd. v.National Westminster Bank Ltd. [1977] 2 All E.R. 862, 869per Kerr J.

  13. 29

    see Goode,supra note 23Establishment Esefka International Anstalt v.Central Bank of Nigeria [1975] 1 Lloyds Rep. 445. at 293.

  14. 30

    The American Accord [1979] 1 Lloyds Rep. 267,per Mocatta J.

  15. 31

    Sztejn v.Schroeder supra note 27.Cf. Megarry J. inDiscount Records supra note 22 at 1074, butcontra Ellingersupra note 23 at 262–264.

  16. 32

    Goode, [1981]Journal of Business Law 150, at 151–152, pointing out that important differences flow from whether the transfer is classified as assignment or novation.

  17. 33

    Per Stephenson L. J. at 164,per Ackner L. J. at 170 andper Griffiths L. J. at 175–176.

  18. 34

    At 163–164, the view put forward by Goodesupra note 23 at 294.

  19. 35

    Supra, note 27.Discount Records, supra note 22. ContrastSztejn v.J. Henry Schroeder Banking Cpn. 31 N.Y.S. 2d 631 (1941)

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Correspondence to Robert Merkin LL.B., LL.M..

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Merkin, R. International fraud and documentary credits. Liverpool Law Rev 4, 76–84 (1982). https://doi.org/10.1007/BF03185310

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Keywords

  • Supra Note
  • Criminal Procedure
  • Criminal Liability
  • False Statement
  • Royal Commission