Union Bank of Nigeria (Nnewi Branch) customer, Innoson Nigeria LTD, applied for issuance of two letters of credit for US$74,745 and US$805,430 in their letter on 18 November 2008. The letter was received by Nnewi Branch on 21 November 2008 and sent to Union Bank of Nigeria’s Foreign OperationsUnitinLagosforprocessingon25



TheBankwasissuedanL/Cfor$74,745butcould not issue a second L/C for $805,430 due to non- availability of foreign exchange to fund the transaction. The customer was duly informed by the relationshipmanagerthatthetransactionfor$74,745 was concluded with the residual Forex balance in the Bank’s possession in respect of a bid made by the Bankon19November2008atarateof117.74

Nigerian Naira (N) to $1.00 and that the Bank did not record any successful bid, nor receive foreign exchange allocation until 5 December 2008 when it received funds from the Central Bank of Nigeria (CBN)atN130.10to$1.00.TheBankthereforewas not able to conclude the L/C for $805,430 at the bid rate of N118 to $1.00.


The customer however was given a copy of the L/C(MT700)stillattheSWIFTmodificationstage. Since no Forex allocation was received, the SWIFT message was not transmitted to the correspondent/ advisingbankoverseas.


ThecustomerinsistedthatthedraftL/Cgivento them confirmed that the transaction was concluded atthebidratesubmittedbythemandthereforeanL/Cwasalreadyinplace. TheBank’sforeign operationsdepartmentmaintainedthatthecustomer was aware of the non-availability of the Forex from CBNon17December2008becausetheypurchased Forex through the autonomous market at a rate of N137.50/1USDtofacilitateissuanceoftheirLCsfor



Review of the Trial Court Judgment

Defendant’sstatementofdefensecontradictsthe trial judge’s claim that the facts under certain paragraphs contained in the court judgment are undisputed.Itisgraveerrortoholdthatthepartiesareinagreement.Itispertinentatthisjunctureto reviewtheaboveparagraphsoneaftertheother.

Inthejudgment,thetrialjudgeindicatedthatthe plaintiffatthematerialtimehadsufficientfundtoits credittocoverthetransactionitsoughtattherateof N117.56toUSD$1.00.


Plaintiff’s Averment

In paragraph 4 of the statement of claim, the plaintiffaverredthat“theplaintiffatalltimesmaterial to this case had sufficient fund to its credit to cover thetransactionandcharges….”


Defendants Averment

The defendant claimed that “Paragraph 4 is also admitted but only to the effect that plaintiff had sufficient fund in thel ocalcurrency,i.eTheNaira,to itscreditinitsaccountswiththeDefendanttocover the transaction it sought at the rate stated in the statementofclaimtounit:N117.56toUS$1.Forthe avoidanceofdoubt,Plaintiffdidnothaveanyforeign currency in its accounts, whether US dollar or any other,thatwouldfinancethetransactionitrequested.” Itisclearthattherewasnoagreementbytheparties contrarytothejudge’sposition.


Position of the Court

On25/11/2008,thedefendantgavetheplaintiffa documentcalled“SwiftLetterofCredit”.


Plaintiff Statement of Claim

On28Nov.2008,thedefendantgavetheplaintiff a “Swift Letter of Credit”. Through the Swift Letter of Credit, the defendant informed the plaintiff that theletterofcredithadbeenestablishedasauthorized. The letter of credit was confirmed by the defendant tobeletterofcreditNo.026LSTF08330000forthe sumofUSD808,430.


Defendant’s Statement of Defense

“4. Defendant admits that it sent a Swift Letter of Credit to the plaintiff. However, defendant contends that the Swift Letter of Credit was a draft, intended for Plaintiff to view and, if necessary, vet. Defendant did not establish or claimtoestablishafinalletterofcredit.TheLC depends on the availability of the foreign currency.”



Contrarytothepositionofthetrialjudge,the defensedisputestheestablishmentofaletterofcredit.


Position of the Court 

“Thaton25/11/2008theplaintiffagainauthorized thedefendanttobidforUSD74,745onitsbehalf.…

ix)Thatthedefendantestablishedaletterofcredit onbehalfoftheplaintiffandadvisedtheplaintiff in writing that the letter of credit had been established.

x)Thattheplaintiffwasgivenamessagereport type07commonlycalledswiftletterofcreditas evidence of the establishment of the Letter of Credit.

  1. xi) That the said Letter of Credit is on all fours withotherswiftlettersofcreditusuallygivento the plaintiff by the defendant after establishing letterofcreditattherequestoftheplaintiff.The saidletterofcreditisExhibit‘P’tenderedinthis case.…

xii) That the swift letter of credit given to the plaintiffon25/11/2008hasallingredientsofavalid letterofcreditsuchasL/Cnumber,L/Ccurrency, Code/Value,applicantsname,beneficiary’sname, opening bank name, advise through bank B/C PWBPCNSHWachovia Bank NA through Shangha,availablewithbyB/C,UBNGB2Union Bank UK PLC, Date and place of expiry of LC intheinstantcase28March,2009inLondon.”


Plaintiff’s Statement of Claim

“Theplaintiffafterthetransactionreferredabove also on 25/11/08 submitted the defendant to bid forUSD74,745onitsbehalf.Thedefendantduly established the letter of credit and afterestablishingitinfavouroftheplaintiffforthesaid sumofmoneydulyadvisedtheplaintiffinwriting thattheletterofcredithasbeenestablished.The plaintiffshallrelyonthemessageReportType07commonlycalledSwiftLetterofCreditgiven to it by the defendant as evidence of the establishmentoftheletterofcredit.ThesaidSwift Letter of Credit is in all fours with other Swift LettersofCreditusuallygiventotheplaintiffby thedefendantafterestablishingletterofcreditat therequestoftheplaintiff.Theplaintiffshallrely onsomeofthemessageReport Type07also knownasSwiftLetterofCreditgiventoitbythe defendantinrespectofsimilartransactions.”




Paragraph 4 and paragraph 6 state that a valid letterofcreditwasestablishedfortheplaintiffbythe defendant through the copy of the SWIFT. The defendant repudiates this claim. The averment in paragraph 4 of the statement of defense indicates thattherewasnoagreement.


According to the trial judge, the defendant did not respond to the averment in paragraph 7 of the amended statement of claim. Furthermore, the trial judgestatedthat;


“TheSwiftLetterofCreditgivento theplaintiffon25/11/08asevidenceofestablishment oftheletterofcredithasalltheingredientsofavalid letter of credit such as L/C number, L/C currency, Code/Value, applicants name, beneficiary’s name, opening bank name, advise through bank B/C PWBPCNSHWachoviaBankNAthroughShanghai, available with by B/C, UBN GB 2 L (Union Bank UK PLC), Date and place of expiry of LC (in the instantcase28March,2009inLondon). Allthe particularslistedabovecontainedintheSwiftLetter of credit establishment advice given to the plaintiff bythedefendantshowthatthedefendantdidindeedestablishtheletterofcreditasperplaintiff’sinstruction but for some inexplicable reasons failed to release sametotheplaintiff’snamedbeneficiary.”


The trial judge held that the defendant did not respondtoparagraph7oftheamendedstatementof claim; however, in paragraph 4 of the statement of defense, the defendant addressed the claim. The defendantcontendsthattheSWIFTCopywasadraft andnotavalidletterofcredit.


The witness for the defense, Paul Omoijiade, testifiedthatthefeaturesenumeratedinparagraph7 of the amended statement of claim are not the only requirementsforavalidletterofcredit. Anissuing bankmustverifyandauthorizetheLCandanadvising bankmustacknowledgetheLC.Thereisnoevidence thatsuchstepsweretaken.


The court held that the defendant did not communicatewiththeplaintiffbetween13/1/2009and

21/11/2008.However,theNnewiBranchletterof13/1/2009 to the plaintiff references priorcommunications. Tousethedateontheletterwithout reviewingthecontentoftheletterdistortsthefacts.


Thecourtheldthattheplaintiffwasinformedon13/1/2009 about the exchange rate difference. The defendant’slettertotheplaintiffwasneverreviewed by the court. The letter referenced previous discussionswiththeplaintiffabouttheexchangerate.


Despitethecourt’sassertionsinparagraphs(xv) to(xxii),therewasnoevidencetosupporttheposition that foreign exchange was procured from Finbank.


Thelearnedjudge,inevaluatingthestatementof claimanddefense,wrote:


“Onthestateofthepleadingsissueswerejoined asto:

  1. WhethertheswiftletterofCreditdated

25/11/2008 sent to the plaintiff by the defendant was only a draft intended to be viewedandvettedbytheplaintiffandassuchdoesnotrepresenttheestablishmentofavalid LetterofCreditonbehalfoftheplaintiffby thedefendant.

  1. Whether there was auction sale at the B.N. foreign Exchange market under the wholesaleDutch AuctionSystemW.D.A.S from29/11/2008to13/1/2009.”


The above issues identified by the trial judge clearlydemonstratealackofconsensusontheissues listedintheopinion.


Evaluation ofthe Oral Evidence of theWitnessesforthePlaintiffandDefendant

Plaintiff’sSoleWitness-AmbroseChinedu(P.W.1). Theonlywitnesscalledbytheplaintiff,Ambrose

ChineduOkolo,filedawrittendepositionon28/7/2011. Hetenderedallthedocumentspleadedbytheplaintiff. His evidence was essentially a reproduction of the avermentsinthestatementofclaim.


Under cross-examination P.W.1 stated that plaintiffinstructeddefendanttobidinthewholesale DutchAuctionSystem.Hegaveevidencethatplaintiff instructeddefendanttopurchaseforeignexchange at the rate of N117.56 to a dollar. He gave evidence thattheplaintiff’sinstructiontodefendantiscontained inExhibit‘B’andwasreceivedbydefendant’sNnewibranchon21/11/2008.Hegaveevidencethatagreed tocarryoutthecontractbytheSwiftletteritgaveto theplaintiffon25/11/2008.Hestatedthathecannot say if the plaintiff’s account was debited with the Nairaequivalentofthedollar.


HestatedthatiftheaccountoftheCompanywas debited, that he, as the financial director of the Company must know. He stated that before a bank canbidonbehalfofacustomeritmustfirstdebitthecustomersaccount.Hegaveevidencethatwhentheplaintiffwasinformedaboutthechangeinexchangerate,itrefused,becauseitcannotaffordtheexorbitantrate of N135 to a dollar.


Hestatedthattheplaintiffcanaffordtopurchase foreignexchangeattherateofN135toadollarbutthatitdidnotwanttopurchaseatthatpricebecause the defendant had breached its contract with the plaintiff. He denied that the plaintiff was asked in December,2008tobringmoremoneyforthepurchase of foreign exchange. He admitted that the plaintiff did two more transactions with the defendant at the rate in paragraph 14 of his deposition which was obtained from the Central Bank and that they went to the Central Bank to find out the exchange rate before it approached the defendant to purchase foreign exchange. He stated that the amount the plaintiff asked the defendant to bid for was the prevailing exchange rate at the time. He gave evidence that in December 2008 the dollar had appreciatedtobetweenN135-N145adollar.Witness wasnotre-examined. The Defendant’sSoleWitness- Paul Omoijiade (D.W.1) D.W.1isPaulOmoijiade,astaffofUnionBank,thehead of TradeFinanceDivisionoftheBank.Headoptedhiswrittendepositionwhichwasfiledon25/5/2009. He identified exhibits ‘L’, ‘M’,’N’, and ‘Ó’ tendered in this case. He stated that the Exhibit ‘L’ embodiedtheplaintiff’scontractwiththedefendant. He stated that the Exhibits ‘N’ and ‘Ó’ aretransactions between the plaintiff and the defendant in December 2008. He stated that Exhibit ‘M’ is a document from the Central Bank showing the date WDASwereopen.Undercross-examination,hestatedthatinExhibit‘B’theplaintiffgavetwospecificinstructionstothe banknamely:


  1. i. Tobidforforeignexchange;
  2. ii. To establish a Letter of Credit on its behalf.


HestatedthatExhibit‘D’giventotheplaintiffis thedraftswiftcopyafteritreceivedExhibit‘B’from theplaintiff.HesubmittedthatExhibit‘D’originated fromthedefendant’sheadofficeinLagos.Hestated that it was sent to plaintiff on 25/11/2008. He stated thattheplaintiff’sinstructionasperExhibit‘B’was receivedbythedefendant’sNnewiBranchon21/11/

  1. He admitted that before this transaction, his bankhadprevioustransactionswiththeplaintiff.He statedthatthe plaintiffwasgivenonpreviousoccasions copiesofreleasedlettersofcreditafterthebankhad carried out its instructions. He stated that the defendant gives the plaintiff copies of the released Letter of Credit duly acknowledged by thecorrespondentbank.Hestatedthatthereleasedletter of credit must be duly authorized by an official of Union Bank Head Office, Lagos. He stated that Exhibit ‘D’ is a draft. He admitted it was not accompaniedwithanydocument.Headmittedwhen the bank sent Exhibit ‘D’ it was clearly stated the swiftcopywas“deletebleandsubjecttomodification. Headmittedthatthephrase,“subjecttomodification”, was not used in Exhibit ‘D’ but that the phrase “modified and deleteble” was clearly stated on the face of Exhibit ‘D’. He stated that they have done several Letters of Credit for the plaintiff and that a draftLetterofCreditissubjecttomodification.He, however, stated that there must be other features present in a valid letter of credit such as:
  2. i) It must be acknowledged by thecorrespondentbank;
  3. ii) Themessagemustbe“modified”andnot deleteble;

iii) Themessagemustpassthroughthe followingstages”:

  1. a) Creation,
  2. b) Verification,and
  3. c) Final


HestatedthatthesefeaturesarenotinExhibit‘D’.Headmittedthatthemessagewasatthecreation stageisinExhibit‘D’buthasnotmovedtoverification and authorization stage. He stated that if the verificationhasbeensuccessfullydone,thatfactwill beclearlystatedontheLettersofCreditanditwould be moved to the authorization stage. He denied that in the Exhibit ‘D’ the various stages were shown to be successful. He admitted that in Exhibit ‘D’ the name of the beneficiary of the money, the bank through which the money is to be sent and the final destinationofthemoneywerestatedtherein.Hestated that there are standard templates, as such, before a movement from one field of the letter of credittoanothercanbedone,alltheinformationmust be so stated and the release of an L.C. does not constitutemovementoffunds. Afterthereleaseof L.C.,theissuingbankwillmovetheforeignexchange toitsownaccountwiththecorrespondentbankusing standard form M.T. 202. He stated that the presence ofthebeneficiary’snameandcorrespondentBank’s nameisnotenoughtoconstituteavalidL.C.Hestated that the L.C. has various panels/fields and that one field must be completed before one can go to the other.He stated that whether L.C. has beenestablishedornotwillrestsquarelyorfinallyonthe correspondentBankwhohasadutyunderU.C.P.600toadvisetheL.C.tothebeneficiary.Thatdutyis notthatoftheapplicantorissuingbank.Headmitted thatthedefendantbankwrotealettertotheplaintiff on 13/1/2009. He stated that the letter reaffirmed previousdiscussionsbetweenplaintiffanddefendant betweenNovember–December2008.Hestatedthat theofficialforeignexchangemarketclosedon19/11/2008andthatthisfactwasbroughttotheknowledge of the plaintiff. He stated that he does not have any letterwrittenbythecustomer’srelationshipmanager to the plaintiff informing it that the official foreign exchange market closed on 19/11/2008 and that in banking practice it is not everything that is put in writing. He admitted that NnewiBranch of the defendant bank wrote the plaintiff on 13/1/2009 explaining about its inability to procure foreign exchange. He however stated that the letter was to reaffirmpreviousinformationpassedtotheplaintiff onnon-availabilityofforeignexchange.Hestatedthat when the bid for $805,000 was not successful, the customerrelationshipmanagercalledtheplaintiff.He stated that in this case, there was no forex market. Hestatedthattheplaintiffdidnotstopthebankfrom makinganybidon21/11/2008buttherewasnomarket onthatday.


Underre-examination,D.W.1statedthathewas present when the customer relationship manager calledtheplaintifftoinformhimaboutthedefendant’s inabilitytoprocuretheforeignexchange.Hetendered whatheconsideredtobeacompleteL.C.withregard to the transaction in Exhibit ‘P’. It was admitted in evidence as Exhibit ‘Q’. Learned Counsel for the plaintiff was granted leave to cross-examine the witness on Exhibit ‘Q’. Under cross-examination,D.W.1statedthatExhibit‘Q’wassenttotheplaintiff. He stated that the plaintiff is not expected to acknowledge receipt of Exhibit ‘Q’. He stated that asaroutinebankingpractice,swiftcopiesaregiven tocustomers.HedeniedthathepreparedExhibit‘Q’ tosuithisevidence.




Written Address by ChidiNworka, Learned Counsel totheDefendant


In his written address, ChidiNworka, learned Counselforthedefendant,submittedthattheplaintiff whoallegedthatthedefendantbreachedthecontract it entered with it should plead and prove the contractualrightswhichgaverisetotherightsitclaims andwhatconstitutestheallegedbreach.


He referred to Shell Petroleum vs. Nwaka[(2003) 1 SCNJ 417/437]. He submitted that the plaintiff failed to plead and tender any contractual documentbetweentheparties;ratherittenderedthe letter with which it authorized the defendant to bid for foreign currency with which the letter of credit would then be opened. He stated that there was no evidence as to whether the offer was even in the amendedstatementofclaim.Hehoweverstatedthat the defendant cured this defect by producing the contractualdocumentexecutedbytheparties(Exhibit‘L’).


He submitted that from Exhibit ‘L’, the plaintiff wastoprovidefundswithwhichforeignexchangeis tobepurchased,thatthefundsprovidedbyitshould be sufficient to purchase the necessary foreign exchange at the time of availability of the foreign currencyhasbeenprocured.Hesubmittedthatonce there is a condition precedent incorporated into a contract, that condition must be fulfilled before the effectcanflow.HecitedthecaseofTsokwaOilvs.Bank of the North [(2002) 5 SCNJ 176/201].He submitted that the claimant failed to plead and lead evidencethatitprovidedthedefendantwithsufficient fundstoprovidetherequired$805,430attherateof N146-156. He referred to the evidence of P.W.1under cross-examination and submitted that P.W.1 admittedthatplaintiffrefusedtoprovidethenecessary funds.


He also referred to the averment in paragraph 8 of the deposition of D.W.1. He submitted that the said averment was not challenged under cross- examinationassuch,itoughttobeacceptedastrue. HecitedthecasesofSommervs.F.H.A.[(1992)1SCNJ13/82]andNzeribevs.Dave[(1994)9SCNJ

161/171-175].Hesubmittedthattheclaimantdidnot prove the requisite foreign currency was made availabletoC.B.N.yet,itfailedtoestablishtheletter ofcredit.


He referred to the averment in paragraph 13 of the amended statement of claim. He submitted that onthecontrarysource,thedefendanttenderedExhibit‘L’.HereferredtoExhibit‘L’andsubmittedthatit was dated 25/11/2008 and that it simply means that the defendant’s obligation under the contract to bid for foreign exchange began on 25/11/2008. He submitted that as at that time, there was no foreign exchange available to the defendant.


Hesubmittedthatthedefendantpleadedandgave evidence that claimant was orally informed that the dollarhasappreciatedagainsttheNairaassuch,more funds were required from claimant to enable the defendant to purchase the requisite amount of claimant’sletterofcredit.HereferredtoExhibit‘H’and submitted that its contents show that there were previous discussionsaboutthetransaction.Heurged thecourttoenterjudgmentforthedefendant.


WrittenAddressbytheLearnedCounselforthe Plaintiff


In his written address, learned Counsel for the plaintiff, G.O. Osuigwe, referred the Court to paragraphs3-5oftheamendedstatementofclaimwheretheplaintiffpleadedwiththecontractbetween itandthedefendant.Hesubmittedthattheplaintiff’s witness gave credible and cogent evidence of the contract in terms of the averment in the said paragraphs.Hesubmittedthatthetermsandconditions of the contract were unchallenged anduncontroverted.HesubmittedthatExhibits‘A’,‘B’,

‘C’,and’D’,inclearandunmistakableterms,confirm thetermsandconditionsofthecontractbetweenthe parties.


HesubmittedthatExhibit‘L’alsoformspartof thecontract.Hereferredtoparagraphs2,3,and4of the statement of defense where the defendant admitted paragraphs 3, 4, and 5 of the amended statementofclaim.Hesubmittedthatitisnotforthe plaintifftopleadthedefendant’sdefenseasaterm ofthecontract.Hesubmittedthattheplaintiff,aside from pleading the terms of the contract, also establishedtheexistenceofavalidcontractwithwell- definedtermsandconditions.Hereferredtothecase of OrientBankNig.PLCvs.BilanteInterLtd [(1997)8NWLRPart515page37]wheretheCourt defined the meaning of a Contract. He referred that the averment in paragraph 5 of the amended statement of claim and submitted that the defendant not only signified acceptance of the offer made by the plaintiff, but went further to notify the plaintiff thattheobligationonitspartofthecontracthasbeen duly performed by it. He submitted that there is no reason for giving a draft of the proposed act to the plaintiff on the facts and circumstances of this case as there was nothing remaining on the part of the plaintifftobeperformedinordertogiveeffecttothe specific terms of the contract. He submitted that D.W.1admittedthatthedocumentusuallygiventoa customerwhenitsinstructionhasbeencarriedoutis calledaSwiftLetterofCredit.Hesubmittedthatthe defendant gave a swift letter of credit (Exhibit ‘D’) totheplaintiffafterreceiptoftheoffer(Exhibit‘B’). Hesubmittedthat,despitetheattemptmadebyD.W.1todiscredit.


Exhibit‘D’,thesaiddocumentstatedclearlythat all the stages have been passed as shown in the said exhibit.Hesubmittedthattheclaimofthedefendantinparagraph4ofthestatementofclaimthatExhibit

‘D’ is a draft is only an afterthought. He submitted thattheplaintiffneverrequestedthedefendanttoavail itofadraftswiftletterofCredittovieworvetbefore thedefendantcanproceedtofulfillitsobligationsto the plaintiff. He submitted that Exhibit ‘D’ satisfied alltherequirementsofavalidletterofcreditandthat theword‘draft’didnotappearonit.


Hesubmittedthatevenifthecourtisinclinedto considerthesaidexhibits,theCourtwillnotfindmuch difference in terms of their contents and effects. He submittedthattheclausesinExhibit‘L’donothave the meaning ascribed to them by the defendant for the draft drawn down under the said credit and stipulatesthatitshallnotbedischargeduntilCentral Bank of Nigeria provides the bank, that is, the defendant,withtherequisiteforeignexchangetomeet paymentbyit.HesubmittedthatExhibit‘L’doesnot maketheperformanceofthedefendant’sobligations totheplaintiffsubjecttowheneveritsuitsittomake bid to CBN or to absolve the defendant of liability, whereas in this case it had established a Letter of Credit and informed the plaintiff to see Exhibit ‘D’ thatitsinstructionshadbeencarriedout.


He submitted that, in interpreting a contract, wordsshouldbegiventheirclearmeaningandthatit is only where the words are not clear that the Court shouldtrytofindtheintentionbehindthewords.He referredtoAmadivs.ThomasAplinCpLtd(1972)NSCL 2266] and OilserLtdvs.L.A.Ibeanu&Co NigLtd[200710CLRNpages20&30].Hesubmitted thatthereisnoclauseinExhibit‘L’thatthedefendant shallonlybeboundtoestablishaletterofcreditifthe CBNprovidesitwithrequisiteforeignexchange.


He submitted that the defendant from the evidence could establish a letter of credit without receivingforeignexchangefromtheCentralBank.HeurgedtheCourttoholdfromExhibit‘Ó’that the defendant established a letter of credit for the plaintiff. He submitted that the defendant’s present positionisanafterthoughttocoveritsfailureorrefusal toreleasetheoriginalletterofcredittothebeneficiaryforreasonsbestknowntoit.HesubmittedthatExhibit‘D’ is an admission by the defendant that Letter of Credithasbeenestablishedbythedefendantinfavourofaplaintiffasperitsinstructionforthebenefitofa beneficiary.Hereferredtothecasesof AnasonFarmsLtdvs.NALMerchantBankLtd19943NWLRpart331page241andUnionBankofNigeriavs.SupremePressLtd[20077CLRN136/175]andsubmittedthat“amanshouldnotbeallowed toblowhotandcold”.


HealsocitedthecasesofWestAfricaPartLand Cement Plc. vs. Odutan[(2007) 6 CLRN 63/83] and Horicon Ltd vs. Wasurum [(1987) 4 NWLR part 66 page 646] and urged the Court to hold that the defendants areestoppedfromdenyingthatit establishedaLetterofCreditasinstructedbyplaintiff in favour of Xiaman Dragon Bus Co. Ltd China but negligentlyfailedtoreleaseit.


Plaintiff’scounselsubmittedthatparolevidence cannotbeusedtocontradictExhibit‘D’.Hereferred toEkev.Odofin[(1961)1ALLNLR842].




Plaintiff’spositionismisleadingbecauseExhibit‘P’ contradicts Exhibit ‘D’. The witness for the defendantexplainedthedifferencesbetweenexhibit‘D’and‘P’.




After reviewing the case, the court came to the conclusionthat:

“Onthestateofthepleadingsissueswerejoined asto:


  1. Whether the SWIFT letter of credit (SLC) dated 25/11/2008 sent to the plaintiff by the defendantwasonlyadraftintendedtobeviewed and vetted by the plaintiff and as such does not represent the establishment of a valid Letter of creditonbehalfoftheplaintiffbythedefendant.
  2. Whether there was auction sale at the CBN foreignExchangemarketunderthe

DutchAuctionSystem W.D.A.Sfrom29/11/2008 to13/1/2009.”


The learned trial judge went further to review the steps in the establishment of a letter of credit as follows:


“It is now settled law that the letter of credit process has been standardized by a set of rules published by the International Chamber of Commerce (ICC). These rules are called the UniformCustomsandPracticeforDocumentary Credits (U.C.P.) and are contained in ICC publicationNo500.


Thefollowingarethebasicstepsundergoneina letterofcredittransaction:

  1. Afterthebuyerandselleragreeontheterms of the sale, the buyer arranges for his bank toopenaletterofcreditinhisfavourforthe seller. Thebuyerwillneedtohavealineof creditestablishedatthebankorprovidecash collateralfortheamountoftheletterof
  2. Thebuyer’sissuingbankpreparestheletter ofcreditincludingallofthebuyer’sinstruction tothesellerconcerningshipmentandrequired
  3. Thebuyer’sbanksendstheletterofcredit totheseller’
  4. Theseller’sadvisingbankforwardstheletter ofcredittotheseller.
  5. The seller carefully reviews all conditions stipulatedintheletterofcredit.Ifhecannot comply with any of them, he will ask the
  6. After final terms are agreed upon the seller ships the goods to the appropriate port or
  7. After shipping the goods, the seller obtains therequireddocuments.
  8. Thesellerpresentsthedocumentstoits
  9. Theseller’sadvisingbankreviewsthe documents,iftheyareinorder,itwillforward them to the buyer’s issuing bank or if the letterofcreditisaconfirmedletterofcredit, theadvisingbankwillpaytheseller.
  10. Ifthebuyer’sissuingbankreceivesand reviewsthedocumentsitwillpayifthereis nodiscrepancy.”




“I do not agree withthedefendantthatthefactthattheplaintiffsaccountwas not debited is evidence that foreign exchangefor the transaction could not be obtained from theCentralBankofNigeria.TheI.C.C.publicationNo.500 and the Uniform Customs and Practice for Documentary Credits clearly shows that the issuing bank debits the account of the buyer and releases documentsincludingtransportdocumentstothebuyer after the seller has been paid. In this case, for inexplicable reasons, the defendant after opening LettersofCreditinfavouroftheplaintiff’sfailedto remit foreign exchange to the seller’s advising bank therebymakingitimpossibleforthesellertobepaid.”


The judge stated: “I do not agree with the defendant that the fact that the plaintiff’s account was not debited is evidence that foreign exchange for the transaction could not be obtained from the CBN.TheICCpublicationNo.500andtheUCPon documentarycreditclearlyshowsthattheissuingbank debits the account of the buyer and releases documentsincludingtransportdocumentstothebuyer afterthesellerhasbeenpaid.”


This position demonstrates a fundamental flaw inthejudgment. Thebuyer’saccountisdebitedat thepointofestablishingtheL/Candwhenthebidfor foreignexchangeissuccessful.


Thepositiontakenbythecourtisnottheposition ofthelaw. ThecourtofappealsinUBNLTDvs. Ozezuah[(1997)NWLRpage30]heldthatunderthe confirmed letter of credit, the buyer requests his banktoopenacreditinfavoroftheseller.Inresponse, thebanker, orhisforeignagent,issuesaconfirmed credit.Theconfirmedcreditisapromisebythebanker to pay money to the seller in return for the shipping documents.Whenthesellerpresentsthedocuments, thesellerreceivesthecontractprice.Theconditions of the credit must be strictly fulfilled, otherwise the sellerwouldnotbeentitledtodrawontheLC.TheCourtaccordinglyfound/heldasfollows:


“It is my view that having regard to all the circumstances of this case that an award of the sumofN75,000,000.00shallinthecircumstances ofthiscasebeafairandadequatecompensation totheplaintiffforthelossesitincurredasaresult ofthedefendant’sbreachofcontract/negligence and I so award. There shall be N30,000 cost in favouroftheplaintiffagainstthedefendant.Thereisequallynodoubtthatadocumentcalled SWIFT letter of credit was sent to the plaintiff on25/11/2008.Thedefendantinparagraph5ofthestatement ofdefenseadmittedtheavermentinparagraph6 oftheamendedstatementofclaim.It is necessary to set down paragraph 6 of the amendedstatementofclaim.”



Paragraph6:Statementof AmendedStatement ofClaim


“Theplaintiffafterthetransactionreferredabove also on 25/11/2008 authorized the defendant to bidforUSD74,745onitsbehalf.Thedefendant duly established the letter of credit and after establishingitinfavouroftheplaintiffforthesaid sumofmoneydulyadvisedtheplaintiffinwriting thattheletterofcredithasbeenestablished.The plaintiffshallrelyonthemessageReportType07commonlycalledSwiftletterofcreditgiveto it by the defendant as evidence of the establishmentoftheletterofcredit.ThesaidSwift letter of credit is in all fours with other Swift letters of credit usually given to the plaintiff by thedefendantafterestablishingletterofcreditat therequestoftheplaintiff.The plaintiff shall rely on some of the message ReportType07knownasSwiftletterofcreditgiven to it by the defendant in respect of similartransactions.”


The defendant clearly under paragraph 4 of the statement of defense denied issuance of a valid L/C totheplaintiff.Thecourtcannotrelyonparagraph5of the statement of defense which has nothing to dowiththeaboveavermenttoassertadmittancebythedefendant.




The Court erred when it held that Exhibit ‘D’ demonstrated the creation of a valid letter of credit. Theabovefactsaredistorted.Creation,verification, andfinalauthorizationareonlypresentinExhibit‘P’, notExhibit‘D’.Moreover,thejudgedidnotcompare all the pages of Exhibit ‘D’ and ‘P’. The judge only evaluatedpages1to3ofExhibit“D”andpages1to5ofExhibit“P”.Page6ofExhibit“P”andpage4of Exhibit “D” demonstrate that the court never evaluatedwhethertheLCwassenttoacorrespondent bank.Thisisagraveerror.Allpagesmustbe compared to determine whether Exhibit ‘D’ and Exhibit‘P’arethesame.


According to D.W.1, the actions of thecorrespondentbankdetermineifavalidletterofcredit exists.ThecorrespondingbankhasadutyunderUCP600toadvisethebeneficiary.Therecannotbeavalid L/C until the correspondent bank fulfills its duty to thesupplier.




Itispertinentatthisjuncturetocommentonthe entirejudgment.Theplaintiffcontendsthatthedefendant carried out the request to open a letter of credit and notify the sellers. The defendant on the otherhandclaimsthattheplaintiff’srequesthadnot beencarriedoutbecausetheplaintifffailedtoprocure theforeignexchangefromtheCBN.


In paragraph 5 of the amended statement of claim,theplaintiffaverred,“Thedefendantonthe25th day of November 2008 gave to the plaintiff a documentcommonlycalled


“SwiftLetterofCredit” whereinitnotifieditthatithascarriedoutplaintiff’s instruction and gave detailed particulars of all it did with respect to the said matter. By the said SWIFT letterofcreditthedefendantadvisedtheplaintiffthat theletterofcredithadbeenestablishedasauthorized. The plaintiff shall rely on the effect of said letter at thehearing.Theletterofcreditwasconfirmedby the  defendant  to  be  letter  of  credit  No.026LSTF08330000forthesumofUSD803,430.00″.


This assertion would completely destroy the plaintiff’scauseofaction.Issuanceandestablishment wouldbesufficientperformanceoftheobligationof thedefendant.Thepositionofthetrialjudgethatthepartiesare in agreement on the fact of the establishment of the LC cannot be supported by the statement of claim, the statement of defense, and the testimonies of the witnesses.The judge, after reviewing the case, concluded that on the state of the pleadings issues were joined asto:


“i.WhethertheSwiftletterofcredit(SLC)dated25/11/2008senttotheplaintiffbythedefendant wasonlyadraftintendedtobeviewedandvetted by the plaintiff and as such does not represent the establishment of a valid letter of credit on behalfoftheplaintiffbythedefendant.


  1. Whether there was auction sale at the CBN foreign exchange market under the Wholesale DutchAuctionSystem W.D.A.Sfrom29/11/2008 to13/1/2009.The above gives credence to the fact that the parties are not in agreement as claimed by the trial judge.”




Thesolewitnessforthedefendanttoldthecourt thatadraftletterofcreditissubjecttomodification. Hestatedthattheremustbeotherfeaturespresent inavalidletterofcreditsuchas:


  1. i. Acknowledgementbythecorrespondent bank;
  2. ii. The message must be “modified” and not deletable;

iii. Themessagemustpassthroughthefollowing stages:(a)Creation,(b) Verification,(c) Authorization.


HestatedthatthesefeaturesarenotinExhibit“D”.The trial judge examined Exhibit “D” and “P” andconcludedthattheyarethesame.Thisisagrave error because the trial judge did not compare all the pages of Exhibit “D” and “P”. If that was done, the trialjudgewouldhaveseendifferencesonpage4of Exhibit“D”andpage6ofExhibit“P”.Evaluatingthedocuments,thetrialjudgewrote:


IshallnowcompareExhibit‘P’and’D’inordertoascertainwhetherExhibit‘D’canalsoqualifyas evidence of establishment of letter of credit. BothExhibits‘P’and‘D’beartheL/Cnumber, L/C currency Code/Value, applicant’s name, beneficiary’sname,openingbank’sname,advice through bank, date and place of expiry of L/C. Theonlyslightdifferenceinthetwodocuments isthatwhereasinExhibit‘D’thestatusisstated to be ‘Modified and deletable’, in Exhibit ‘’P” the status of the message is said to be only “Deletable”.


D.W.1statedundercross-examinationthatavalid L/C must have features such as acknowledgement bythecorrespondentbank,thatthemessagemustbe modifiedandnotdeletableandthatitmusthavepassed throughcreation,verification,andfinalauthorization. He stated that these features are not in Exhibit ‘D’ tenderedinthiscase.


The trial judge wrote:


“The defendant tendered Exhibit‘Q’on9/2/12asthefinalcopyofExhibit‘P’ senttotheplaintiffattheconclusionofthetransaction inproofoftheestablishmentofavalidletterofcredit.”


The above is an error because Exhibit ‘P’ is the finalversionofavalidLCandnotExhibit‘Q’.Exhibit‘Q’onlyreinforcedit.


EveniftheCourtdisregardedExhibit‘Q’,Exhibit‘P’pleadedbytheplaintiffisafullletterofcredit which can stand on its own.Featuresonpage4ofExhibit“D”andpage6ofExhibit“P”werenotevaluatedbythetrialjudge.The Messagemovedfromcreationtoverificationand finallytoauthorizationanddulyacknowledgedbythecorrespondentBank.Transactioncertifiedcompleted.


Thejudgeheldthattheonlydifferenceinthetwo documents is Exhibit ‘D’’s status is “modified and deletable”andinExhibit‘P’thestatusofthemessage isonly“deletable”.


The judge wrote that D.W.1 stated that a valid L/C must have features such as acknowledgement bythecorrespondentbankthatthemessagemustbe modifiedandnotdeletableandthatitmusthavepassed throughcreation,verification,andfinalauthorization. He stated that these features are not in Exhibit ‘D’ tendered in the case. He admitted that Exhibit ‘D’showsthattherewasmessagecreation,verification,andthatauthorizationwassuccessful.


D.W.1 stated that the fact as to whether an L/C hasbeencreatedrestssquarelyonthecorrespondent bankwhohasadutyunderUCP600toadvisethebeneficiaryoftheLC.TherecannotbeavalidLCuntilthereisavalidadvisebythecorrespondentbank.


Theunderlinedstatementbythetrialjudgeishis creation as the features in the L/C draft Exhibit ‘D’ did not have the features listed by the trial judge. Those features listed by the learned trial judge are onlyonExhibit“P”.




In reviewing the L/C establishment process, the judgemadeagraveerror.Inparagraph11,thejudge concludes that the last stage in the L/C process is to debitthebuyer’saccount. Thisappearstobean attempttodemonstratethatitisnotnecessarytodebit an applicant for the establishment of an L/C on the dateoftransmissiontothecorrespondentbank.This demonstrates a lack of understanding of the L/C establishment and management process. The error wouldhavebeenavoidedifthetrialjudgehadtaken pains to evaluate the evidence of D.W.1 and other documentstendered.


Thejudgewentfurther:“Idonotagreewiththe defendant that the fact that the plaintiff’s account was not debited is evidence that foreign exchange for the transaction could not be obtained from the CentralBankofNigeria.TheI.C.C.PublicationNo.500 and the uniform custom and practices on documentarycreditclearlyshowsthattheissuingbankdebitstheaccountofthebuyerandreleasesdocumentsincludingtransportdocumentstothebuyerafterthesellerhasbeenpaid.In this case, for inexplicable reasons, the defendant after opening LettersofCreditinfavouroftheplaintiff failedtoremit foreign exchange to the sellers advising banktherebymakingitimpossibleforthesellertobepaid.”


ThetrialjudgereferredtoSPASCOVehicleandPlantHive.Co.Ltdvs.AlvaineNigeriaLTD[(1995)9SCNJpages288/299]andheldthatthedefendant, havingadmittedtheavermentinparagraph6,cannot enterExhibit“Q”intoevidencetodemonstratethatit carried out the plaintiff’s instruction on paragraph 6 ofhisamendedstatementofclaim.

Theabovepositionofthecourtismisleadingand confusing because Exhibit “Q” is not evidence that anL/Cfor$805,000wasestablishedon25/11/2008. Paragraph 6 of the amended statement wasvehemently denied by the defendant in paragraph 4 of the statement of defense. The court states that underUCP500thebuyer’saccountisdebitedatthe end of the transaction; however, there is no such provisionunderUCP500orUCP600.Thetestimony of the sole witness to the plaintiff stated that the buyer’saccountisdebitedatthepointofbidforforeign exchange. He also admitted that as the finance directorhemustknowwhenhiscompany’saccount isdebited.




The CBN letter, Exhibit “M”, was presented to thecourt.Thedocumentwasoriginalandshowedall ForexpurchasesinNovember-December,2008. A document in this condition does not require certification.However,thejudgeattachedlittleweight to the document because it was not certified. Moreover, the plaintiff did not produce evidence to showthatForexwassoldbyCBNtotheplaintiff.





Customers’ application for the establishment of theL/CwasmadesubjecttoUCP 600.Generally, partiestoL/CarenotboundbythetermsoftheUCP until the terms are incorporated into the L/C. In the case of Eagle Super Pack (Nig.) LTD vs. African Continental Bank [(2006) 12 CLRN], the Supreme Court held that the Uniform Customs and Practice for Documentary Credits can only be relied upon wheneveritisincorporatedinthecontract.


Intheinstantcase,customersagreedthattheL/CshouldbesubjecttoUCP600.The L/C forwarded by the applicant to the beneficiariesoverseasmustbeconstruedinlinewith theprovisionsofUCP600.UnderUCP600Article9,acreditandanyamendmentmaybeadvisedtoa beneficiarythroughanadvisingbank.Itfollow therefore, that the purported advise of the L/C in questiontothebeneficiarybytheapplicantisafarce and at odds with the provisions of the Uniform CustomsandPractice(UCP600).


Itismysubmissionthatthecustomersknewfrom the very beginning that what they had in their possessionwasanL/C.Theyarealsoawarethatthe release of the original L/C is dependent on the provisionoffullforexcover.Customersintheirletterof22/01/2009wrote:


We wishtoremindyou,yourbank’slongdelayinrelaying the original confirmation telex copies of the above establishedLetterofcredit.All and all, we are appealing that you use your good offices to ensure that this issue is treated once andforallbyensuringthatthesaidoriginalL/Ctelex copies are released to our supplier/beneficiary to enable them execute the shipment of our motor factory.”


The plaintiff in paragraph 12 of the amended statementofclaimstatedthat:


“Theplaintifffollowing a letter dated 22/2/09 received from the beneficiary oftheletterofcredit-XiamenDragonBusCo.LTD Complainingthatithadnotreceivedtheexpectedfund wrotearemindertothedefendant.Thedefendantisgivennoticetoproducethesaidreminderdated22/1/99.”(FundrefertoL/Cintheabovecontext).


The plaintiff was in agreement that the SWIFT copy given to them was not an original but a draft. One wonders how the trial judge came to the precipitateconclusionthatthedefendantestablished aletterofcreditfortheplaintiff.


In Union Bank of Nig.PLC v. SparklingBreweriesLTD[(1997)SNWLR],thetrialcourtheld thatanL/Chadbeenopenedbythebankandawarded damagesagainstthebank.Onappeal,thetrialcourt’s decisionwasoverturnedbytheCourtofAppeal.The appellate court held that a letter of credit cannot be issueduntilithasbeensenttothecorrespondentbank andthesellerhasbeennotified.TheSupremeCourt affirmed the judgment. The court noted that absent these conditions, it would be extremely difficult to objectively analyze the contract in terms of “offer” and “acceptance”. The trial judge failed to consider these landmark decisions of the Nigerian Supreme Court and Court ofAppeal.


The trial court’s decision is legally flawed and maynotstandonappeal.Lettersofcreditareglobal instruments to facilitate international trade. The decisions of our courts on such instruments cannot escape the prying eyes of the global business and legalcommunity.