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ACCA Applied Skills · Corporate and Business Law (Global) · Transportation documents and means of payment

Quill Ltd is seller under a credit that expired on 30 June and required shipment by 15 June. Quill shipped on 14 June and presented complying documents to the bank on 2 July, saying the delay was caused by a public holiday in its own country. Which statement is correct?

The bank may refuse to pay. Documents must be presented within the credit's validity, and presentation on 2 July came after the 30 June expiry. Timely shipment does not cure this, and the seller's local holiday does not extend the credit, given the strict compliance principle.

  1. AThe bank may refuse payment, because presentation was made after the credit's expiry dateCorrect
  2. BThe bank must pay, because shipment occurred before the latest shipment date
  3. CThe bank must pay, because a holiday excuses late presentation by the seller

Explanation

Strict compliance covers timing as well as content. The credit expired on 30 June, so documents presented on 2 July were late. Timely shipment does not cure late presentation. A seller's local holiday is not an excuse unless the credit says so, so the bank may refuse.

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