Documentary Letter of Credit as an Instrument for Improving Consumer's Safety

Abstract

This research has been conducted to explore critically the banking practice in respect of documents examination in search for settlement under the documentary letter of credit. Since this payment method provides a relative degree of protection for both sellers and buyers, this study has been conducted to investigate the ability of the documentary letter of credit under Uniform Customs and Practice (UCP 600) to improve the consumers' protection in respect of imported goods. This research can be helpful to both academic field and practitioner bankers, so that the results of this work will not just be an extraction of facts, but will give them information with which they can better improve their practices and procedures in respect of shipping documents examination. The research problem can be summarized as follows, despite the dramatic increase in the number of professional practitioner bankers during the current decade and the significant developments in respect of laws and rules governing the documentary letter of credit procedures and operations, consumer's Safety in respect of Imported Goods still is a questionable issue. This study aimed to find ways to reduce Discrepant Documents Waiver rates, in attempt to reduce the increased levels of Consumers' dangers due to in conforming goods. The study adopted descriptive methodology where Structured Questionnaire Surveys which requires respondents to answer on a five point Likert Scale was adopted. The population frame has been defined as a listing of 90 Practitioner Bankers in the field of Documentary Letter of Credit at Khartoum City, from which the purposive judgment sample were drawn. The study main findings include:  Approaching applicant by the virtue of article 16(b) was well stated, but has been misused and distorted by commercial or banking practices, which has obviously harm consumer's safety in respect of imported goods.  The reputable theory is of the strict compliance of the UCP 600, contributes more to the consumers' safety and protection in respect of imported goods.  Issuing bank undertaking is that: to honor only complying presentation Irrespective of what called for under Art.16 (b). vi The study main recommendations include:  Issuing Bank in order to restore the letter of credit effectiveness, it would be of great importance if it adopts the Strict Compliance Doctrine as standard documents examination practice as prescribed by article: (2).  When the issuing bank determines that a presentation does not comply, it would be of significant proactive protective decision to refuse to honour discrepant presentation.  It would be of great practical value to introduce consumers' protection legislations those obligate concerned bodies in respect of the letter of credit transaction to consider the element of consumers' safety and environmental issues.