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This paper is aiming at analysing English Case law on Santander v. Paribas together with the legal opinions of American high legal society, in order to refer it to Korean Case, related to the discounting of deferred payment undertaking credit that has long been utilized as an effective trade financing in the forfait market. In this case, applicant alleged fraud by the beneficiary after the date of discounting by Santander but before the maturity date of deferred payment undertaking as stipulated in the credit. English court decided that the risk of discounting falls on Santander by the application of the rule governing the assignment of contractual rights, UCP 500 and English case law, and the principles of holder in due course. On the other hand, US position on this case expressed quite opposite opinion in accordance with rules codified in UCC Article 5-109, Fraud and Forgery which provide for an exception to the fraud defence in favour of a confirming bank that has discounted its own credit obligation. In relation with the case of discounting the deferred payment obligation, Korean Supreme Court has also made a similar decision to that of English court in the Santander case. It has established a new rule which allows the discounting of deferred payment undertaking, provided the terms are incorporated into the Credit, which will be made available for discounting of deferred payment by the nominated bank. This will surely provide excellent opportunities for the forfaiter to prepay or discount the deferred payment, and contributing to the development of international trade finance and forfait industry. As for the US L/C Law, UCC Article 5 might have a good reason for the US to accommodate local legal problems relating to L/C transactions. But throughout the world, UCP 500 has contributed far more to the unification of L/C customs and practices during last 60 years. It is necessary to mention that we have to try our best effort to keep UCP effectively workable, instead of codifying the national law like UCC Article 5 or by nation to nation.


This paper is aiming at analysing English Case law on Santander v. Paribas together with the legal opinions of American high legal society, in order to refer it to Korean Case, related to the discounting of deferred payment undertaking credit that has long been utilized as an effective trade financing in the forfait market. In this case, applicant alleged fraud by the beneficiary after the date of discounting by Santander but before the maturity date of deferred payment undertaking as stipulated in the credit. English court decided that the risk of discounting falls on Santander by the application of the rule governing the assignment of contractual rights, UCP 500 and English case law, and the principles of holder in due course. On the other hand, US position on this case expressed quite opposite opinion in accordance with rules codified in UCC Article 5-109, Fraud and Forgery which provide for an exception to the fraud defence in favour of a confirming bank that has discounted its own credit obligation. In relation with the case of discounting the deferred payment obligation, Korean Supreme Court has also made a similar decision to that of English court in the Santander case. It has established a new rule which allows the discounting of deferred payment undertaking, provided the terms are incorporated into the Credit, which will be made available for discounting of deferred payment by the nominated bank. This will surely provide excellent opportunities for the forfaiter to prepay or discount the deferred payment, and contributing to the development of international trade finance and forfait industry. As for the US L/C Law, UCC Article 5 might have a good reason for the US to accommodate local legal problems relating to L/C transactions. But throughout the world, UCP 500 has contributed far more to the unification of L/C customs and practices during last 60 years. It is necessary to mention that we have to try our best effort to keep UCP effectively workable, instead of codifying the national law like UCC Article 5 or by nation to nation.