Abstract
LL.M. (Banking Law)
The aim of this dissertation is to investigate the inconsistencies surrounding the application of
the doctrine of strict compliance and the fundamental impact of the fraud exception in letters
of credit transactions. It attempts to find out what could reduce the inconsistent
interpretations of the doctrine of strict compliance focusing on discrepancies in letters of
credit in case law and other determinations made by quasi – judicial bodies. Furthermore, the
aim is to enhance the stability of letters of credit in international trade.
The case law concerning the doctrine of strict compliance and exception to fraud over the
past decade has been somewhat inconsistent owing to varied interpretation of the doctrine.
Furthermore, the dissertation investigates whether there is a need to improve the rules
regarding of the Uniform Customs and Practice for Documentary Credits (UCP),1 and the
International Standard Banking Practice (ISBP) concerning discrepancies in the document,2
given the fact that these two instruments act merely as guidelines which parties may adopt or
modify in their contracts.
This second part of this dissertation aims to examine the extent of the application of the fraud
exception to the independence principle that governs the letters of credit, considering the
South African position compared against the approach in England in an overall attempt at
determining whether the approach of the South African courts in this regard can be improved.
Certain questions such as when is the fraud exception evoked, or which party must be in
default to trigger the application of the fraud exception will be addressed in this dissertation.