Narrow fishingand trading companyVrs Quansah And Others (C.A 37/2003) [2006] GHACA 8 (19 July 2006);

IN THE SUPERIOR COURT OF JUDICATURE

IN THE COUR OF APPEAL  -  ACCRA

CORAM  -  OWUSU ANSAH, JA [PRESIDING]

                                                   OSEI, JA

                                                   QUAYE, JA

CIVIL APPEAL NUMBER

C.A 37/2003

19TH JULY, 2006

NARROW  FISHING & TRADING COMPANY  …   PLAINTIFF/RESPONDENT

                     V   E    R    S    U    S

(1)  JAMES RICHARD QUANSAH

                                                  …   DEFENDANTS                         

(2)  SAVIOUR WOODWORKS LTD.        

(3)  NATIONAL INVESTMENT BANK LTD.  … 3RD DEFENDANT/APPELLANT     

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                                           J  U  D  G  M  E  N  T

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QUAYE, J.A. - The appeal herein is from the judgment of the High Court, Accra, delivered on 27th July 2000.  The action in the trial court was initiated by the plaintiff (now respondent in this judgment) to seek relief from the three defendants therein.  At the trial, evidence was offered by the plaintiff/respondent to support the action.

On the side of the defendants only the 3rd defendant bank sought to resist the claim of the plaintiff.

            The trial ended in favour of the plaintiff/respondent as the defence of the 3rd defendant did not find favour with the trial court.  The action of the plaintiff against the 1st and the 2nd defendants was dismissed.  The present appeal is therefore between the 3rd defendant (herein appellant) and the plaintiff (respondent).

            The respondent entered into an agreement on 3rd December 1993 for the importation of (one thousand) 1,000 metric tonnes of fresh frozen fish: mackerel, from a United Kingdom based company trading under the name of World Scope Limited.  The said importation was to cost US $455,000.00 out of which the respondent was required to  deposit twenty per cent the total cost.  That worked up to ¢64,000.000.00  (sixty four million cedis) only.  The payment of the twenty per centum deposit of ¢64 million was supported with a guarantee by the 1st defendant who, as the managing director of the 2nd defendant company, undertook to be bound to due performance of the contract between the respondent and World Scope Limited.  Under the said contract, the fish was to be delivered to the respondent on or before the 30th December, 1993, and the respondent was to complete the purchase within thirty days after receipt of the said consignment of imported mackerel.  In spite of the undertaking on the part of the 1st and 2nd defendants they failed to pay the money to World Scope Limited hence the fish was not supplied by them to the respondent.   

            After this initial failure the 1st defendant who spoke and acted as if he held a lien, and could exercise absolute control of, and determine and/or dictate how the deposit of  ¢64,000,000.00 was to be used, took the reluctant respondent to Mauritania for fish, and when that second attempt failed, he lastly decided to buy the fish from a company by the name Hyundai International Trading Corporation c.c. of the Republic of South Africa.  The 1st defendant informed the respondent that he had negotiated for the supply to the respondent the quantity of 2,000 metric tones of fresh frozen horse mackerel at the cost of US$1.110,000.  This third attempt was to be supported by the initial deposit already made by the respondent.

            Recurrently, the respondent, after the failure of the World Scope contract, and the subsequent attempt to import fish from Mauritania, demanded the refund of the ¢64 million deposit from the 1st defendant but the latter showed no inclination to part with same.

In respect of the Hyundai agreement, the 1st defendant prevailed upon the respondent that he would use the ¢64 million deposit to open Letters of Credit for the plaintiff, and further, that his bankers, the appellant herein, would then effectuate the importation of  the 2,000 metric tonnes of fish.  In furtherance of this assurance, the 1st defendant informed the respondent that he, the 1st defendant, had opened Letters of Credit (LC) at the appellant bank.  He therefore gave to the respondent an Import Declaration Form (IDF) which the latter executed by appending his signature.

            It is material at this stage to state that the respondent was not a customer of the appellant bank.  Rather, it was the 2nd defendant who operated accounts thereat.  Under this situation the 1st defendant contacted his bankers, the appellants, for the opening of an LC on 30th January 1994 on behalf of the respondent in favour of the supplier/exporter Hyundai International Trading Corporation c.c. of South Africa.

The fact that the respondent did not previously know about the Hyundai Corporation whilst the 1st defendant knew them gives credence to, and further authenticates the respondent’s averments.  It is quite obvious therefore that the 1st defendant was firmly rooted in the pilot’s seat in so far as the transaction and arrangements relating to the respondent’s importation of fish went.

            It turned out however that misunderstandings and mistrust welled up between the respondent and the 1st defendant, and when it came to a head, the respondent attempted to jump into the driver’s seat in order to ensure that the project did not boomerang.

            The respondent saw the LC for the first time after one Mr. Otuahene of the appellant/bank had given it to him upon the direction of the 1st defendant.  That was in February 1994.  In March the 1st defendant informed respondent that he had received a telex from Hyundai which indicated that only 90 metric tonnes of fresh frozen fish would be arriving, and not the promised or expected 2,000 metric tonnes of horse mackerel as appeared on the IDF.  This fact put the respondent on his guard to retract.  He therefore called on the 1st defendant and the appellant herein to cancel the LC and refund the deposit of US$50,000 to him.  Apparently, the 1st defendant had previously refunded US$3,500 through one Madam Odey, the financier of the respondent.  The respondent’s misgivings and protestations at this time were justified by the Ghanaian customs regulations that forbade the issuance of clearing licence for imports of fish that fell below 500 metric tones minimum.   From the evidence so far it becomes apparent that the 1st defendant did not merely occupy the central position in the triumvirate comprising the  respondent, the appellant and the suppliers, but that indeed, it was he who committed the unwilling respondent to the appellant and the suppliers.  The respondent did not at anytime enter into or exchange correspondence with the correspondent bank or vice versa.  As matters stand at present however, the part played by the 1st and 2nd defendants who are not parties in this appeal, appears finally determined by the trial court, and any misgivings that I might entertain on the dismissal of the action against them would have no bearing on this appeal.  We therefore have to leave the sleeping dogs to enjoy their rest.

            The case involving the appellants started with the opening of the LC by 1st defendant on behalf of the respondent in favour of the suppliers, Hyundai International Trading Corporation c.c. and the appointment by the appellant unilaterally, of the Midland Bank as the advising or correspondent bank with regard to the LC, for the respondent in favour of Hyundai as beneficiary.

            When the respondent gained knowledge about the tonnage of fish that Hyundai were exporting to him, he wrote to the appellant to request the cancellation of the L/C.   

The latter replied by stating the legal position for the information of the respondent that the L/C, being irrevocable, could only be cancelled with the consent of the beneficiary.  The respondent, both before and after the expiry of the L/C on 29th April 1994 seized, on every opportunity to press home his demand that the L/C be cancelled.  Before 29th April 1994, the appellant stuck to the position that until the L/C had expired, the consent of the beneficiary was sine qua non for its cancellation. 

            After the expiry of the L/C the respondent did not relent in his demand for cancellation.  With this clearly stated intention or desire, of the respondent, what legal conditions would inform the continued refusal or inability of the appellant to cancel the L/C after its expiration.  On 10th May 1994, about eleven days after the expiration of the L/C and in response to the respondent’s repeated request that the L/C be cancelled, the appellants wrote inter alia as follows:

                        “We refer to your letter of 4th May, 1994, requesting us to cancel

                         the above mentioned L/C due to non-performance on the part of

                         the supplier Messrs Hyundai International Trading Corporation

                         of South Africa.

                        “We have been in contact with our correspondent Bank, Midland

                         Bank plc. and they have informed us that documents conforming

                         to the terms and conditions of the L/C have been submitted by the

                         Supplier and for which payment has been effected.  The said

                         documents have been dispatched to us by courier and we shall

                         be in touch with you for the release of these documents to enable

                         you clear the goods concerned as soon as we receive them……”

            After the above, the appellants again wrote on 16th May 1994 to the respondent that

                      “…….We have received documents in respect of the above-mentioned

                     from the advising bank with the following discrepancies……”

affecting, or apparent, on the face of the bill of lading, and the SGS (General Superintendence company) clean report of findings.   The letter ended with a request to the respondent to commit himself on paper indicating his acceptance of the discrepancies.  As would be expected from his conduct so far, the respondent rejected the discrepancies and repeated his demand for the cancellation of the L/C by letter dated 17th May 1994.  The position was reiterated by the respondent in another correspondence dated 8th June 1994.

            The interaction between the respondent and the appellant was not only documentary.  Officers of the appellant Bank who dealt with the respondent in their normal course of duty on behalf of the appellant included one Mr. Otuahene from whom the respondent obtained a copy of the L/C.  Mrs. Holdbrooke Smith who was head of the appellant bank’s foreign Operations Department, and in that capacity wrote and/or signed almost all the letters that were exchanged with the respondent relevant to this case; Mr. Zaglo who gave to the respondent on behalf of the appellant what purported to be official documents in the nature of bill of lading; Mr. Ofosu and the Managing Director of the appellant bank.  What purported to be bill of lading (tendered into evidence as the Exhibit R series) led the respondent on a wild goose chase.  The documents suggested that the fish consignment had been loaded on a ship, better identified as Tropic Lines.  Upon inquiry, from the agents, Delwas Shipping Lines, the respondent drew a blank.  He was told that the vessel, Tropic Lines had ceased to operate about a year, before the enquiry; that the statement by Mr. Zaglo, or his wife, of the appellants office, that the ship had already entered the territorial waters of Ghana was false; that they had been given a yellow bill of lading instead of blue, and that the documents that the appellants gave to the respondent were fake.  As if to vindicate the respondent, the suppliers on 21st June 1994 faxed the following message to the respondent.  Inter alia, it stated

                        “…….To date we have been unable to load the small order of 90

                          MT due to this small capacity…….

                          ………Presently we cannot confirm the shipment dates but will

                          do so as soon as it is confirmed.

                          Once again, apologies for any misunderstanding but we are not to

                          blame”

            At the end of the trial, the learned trial judge found against the appellant on the basis that no compliant documents were presented to the Bank by the suppliers before the expiration of the L/C on 29th April 1994; that after the expiration of the L/C the respondent clearly instructed the appellant to cancel the L/C and that the payment of the US $50,000.000 to the supplier was wrong. 

            In arriving at the above conclusions the learned trial judge took time to examine the evidence under various heads including claim for US $50,000.00; the alleged discrepancies; the expiration of the L/C; and the failure of the appellant to cancel the L/C.

            This appeal was stated to have been “lodged to prevent a situation where the National Investment Bank Limited will be made a scape-goat for the inefficiencies of the Respondent and its friends, the 1st and 2nd Defendants.

            Counsel for the appellant discussed the law on negligence and urged upon us that the material issue upon which to determine the conduct of the parties, particularly, the appellant is the issue of careless behaviour.  The appellants maintain that their conduct in the whole transaction measured up to the standard and scope of the law.  After laying this foundation by way of introduction, counsel for the appellant cited the International Chamber of Commerce Uniform Customs and Practices for Documentary Credits 1993 Revision, ICC Publication No. 500 to be the relevant and applicable law, under the provisions of which their conduct should be tested.  On this basis learned counsel for the appellant faulted the reliance by the trial court on the decisions in the two cases EQUITABLE TRUST CO of NEW YORK VRS. DAWSON PARTNERS LIMITED {1927} 27 LLL. Rep. 49 and J.H. RAYNER AND OILS SEEDS TRADING CO. LIMITED VRS. NAMBROS BANK LIMITED {1942}A LL er 694 as being in error.   

The above form the general introduction to learned counsel’s submission.

            The 1st ground of appeal is that the judgment is wrong and cannot be supported having regard to the evidence led in the trial.  I will take this ground and additional grounds 1 & 2 together in this judgment.  The rule is that where the whole judgment is put in issue, as suggested by these grounds of appeal, it is the appellate court’s duty to decide upon the facts and applicable law whether the trial court applied proper legal standards and whether there was reasonable support for its evaluation of factual questions.  The conclusions drawn by the trial court then become subject to broad review and will be reversed if they are found to be incorrect.  See LE CLAIR VRS TOWN OF NORWELL 430 Mass 328 at 331 (1999).

            Counsel for the appellant took issue with the findings of the trial court with regard to discrepancies and the expiration of the L/C.  In dealing with the issue of discrepancies, counsel asserted that the appellant was satisfied that there were no discrepancies.  The respondent was also convinced that there was none, hence he accepted the documents, albeit he later returned them after the space of two weeks.  He submitted that there were no discrepancies but even if there were, the appellant cannot be held liable.   He also cited article 15 of UCP 500 in support.  Counsel furthermore submitted that the doctrine of strict compliance which formed the basis of the conclusions of the learned trial judge is inapplicable in this case because it is in direct conflict with the UCP 500.  He finally submitted on this subject that the correspondent bank is agent of the respondent, not the appellant.

            Certainly, very interesting and far reaching legal and factual issues have been raised in the above submissions.  I therefore deem it my duty to scrutinize and analyse them to test their ability to sustain.  In the first place the learned counsel for appellant cannot deny that there is a duty relationship between them and the respondent; and also between the appellant and the advising bank.   Where a duty exists, it must be faithfully observed since breach thereof would, subject to the existence of other requirements, result in damages.  The duty owed to the respondent was established with the opening of the L/C.  This created an obligation on the part of the appellant to keep to the clear terms under which the L/C was to operate.  It was therefore their duty, which they owed to the respondent, to ensure that the terms thereunder were kept.  Being aware of the duty created which must be brought to fruition, the appellants sua sponte linked up with the Midland Bank to perform the duty that had to be discharged.  That duty, required under UCP 500, strict compliance with the terms and conditions imposed.  For a few illustrations, a look may be taken at articles 2(iii); 9(a), (b), 13(b) and (c); 14(b) just to mention a few.  Article 2 (iii) is in the following terms:       

                        “(iii)  authourises another bank to negotiate, against stipulated

                                 documents provided that the terms and conditions of the                                                                          

                                 Credit are complied with

                              Article 9(a) states “(a) An irrevocable credit constitutes a

                              definite undertaking of the Issuing Bank, provided that the

                              stipulated documents are presented to the Nominated Bank

                              or to the Issuing Bank and that the terms and conditions of the Credit

                              are complied with. (emphasis mine)

           It is my humble submission of fact that the phrase requiring compliance is recurrent substantially throughout UCP 500.  The only difference perhaps is the omission of the word “strict.”  The absence of the adjective “strict,” however does not, in my quiet consideration, derogate from the import of the message envisaged, or for that matter, the mischief sought to be addressed.  It is therefore my respectful view that the position taken by the appellant that the doctrine of strict compliance is in direct conflict with UCO 500 cannot be supported.

            This brings me to the question of the relationships between the parties.   The first one, as I have already pointed out is the duty created between the respondent and the appellant, the latter taking it upon themselves to process the L/C.  The other is that between the two banks.  The advising bank is agent for the issuing bank to the extent that one compliments the other to ensure that the relevant documents are passed in compliance with the conditions.  The advising bank cannot commit the money without authorization of the issuing bank.  This position is illustrated by the notification that issued from the advising bank to the issuing bank (the appellants) when they detected the discrepancies.  The issuing bank carried out its duty by notifying the respondent and waiting for his answer or reaction and then communicating same unto the correspondent bank.  The chain of command is clear.  Agency has been stated in simple terms to be the relationship which exists between two persons, one of whom expressly or impliedly consents that the other should represent him or act on his behalf, and the other of whom similarly consents to represent the former or so to act.  (See Bowstead on Agency page 1).  For their part, the authors of Blacks Law Dictionary Sixth Edition defined “agency” at page 62 to be “a relationship between two persons, by agreement or otherwise; where one (the agent) may act on behalf of the other (the principal) and bind the principal by words and actions.  Relation in which one person acts for or represents another by latter’s authority….”  Inferentially the appointment of the Midland Bank as the correspondent Bank by the appellant Bank created a relationship of agency between them.  Article 7 of UCP 500 when construed by the ordinary meaning of the words, seems to endorse the above reasoning.  Where the advising bank was appointed by the issuing bank without prior consent of the respondent, and where throughout the whole transaction there was no evidence of any direct communication or correspondence between the purchaser and the correspondent bank,  then to submit or conclude that the correspondent bank is agent of the purchaser and not the issuing bank, is to say the least, far fetched and legally unacceptable. If there was any doubt still lingering in minds, that issue was firmly put to rest by the illustration given on page 31 of Bowstead on Agency that “where a letter of credit is opened, the instructing bank and the confirming bank are in the positions, at any rate in some respects, of principal and agent respectively”  as held in BANK MELLI IRAN VRS. BACLAYS BANK {1951} 2 TLR 1057 and also in BENJAMIN’S SALE OF GOODS {1974} paragraph 2082.  With due deference I do not think UCP 500 holds a different or conflicting position as regards the parties.  In modern practice it may be stated cursorily that once a letter of credit is properly issued, the customer has no right to modify it or revoke it; the beneficiary is entitled to the full benefits of the stipulations in the L/C and that the issuing bank would be liable in damages if it violates the terms of credit; the L/C is construed strictly and ambiguities are applied against the writer.

Where therefore the L/C is clear in its terms and not ambiguous, it behoves the issuing bank to interpret and apply it strictly as under UCP 500.  Where the contents of the shipping documents issued by the supplier to the correspondent bank is even slightly different from the actual words of the L/C then in that case a discrepancy arises.

In order to determine what constitutes discrepancy the decided authority cited by the learned trial judge is relevant and it may be examined among others.

            The case of J.A.RAYNER & CO LTD. AND OILSEEDS TRADING CO, LTD. VRS. HAMBROS BANK, LTD. [1942].  All ER 694 needs being taken a second look at.  In that case the description of the imported goods was stated in the L/C.  When later the bill of lading was issued, it was found to contain a slight variation in the description of the goods from what appeared in the L/C.  As a matter of fact the bill of lading contained words of description which could easily and satisfactorily identify the consignment.  That fact notwithstanding, the bill of lading, instead of keeping strictly to the description “coromanded groundnuts in bags” added or used another name “machine shelled groundnut kernels,” a name which could generally interchange with “Coromanded groundnuts in bags.”  The court however accepted that the description was discrepant.  In the instant appeal, the letters of credit which was tendered in the trial court as exhibit 3D3 stated its conditions in clear language.  Inter alia, it required notification to be made in the names of National Investment Bank and Narrow Fishing Co. Ltd.  Furthermore, it required the freight receipt to be issued and signed by the carrier or their accredited agents.  The latest shipping date and the expiry date were stated to be 8th April 1994 and 29th April 1994 respectively.  When the bill of lading was served on the correspondent Bank, that bank detected discrepancies which they forwarded to the appellants (the issuing bank) and the latter further forwarded it to the respondent.  At this stage it was clear that all of the correspondent bank, the issuing bank and the respondent were ad idem that the documents were discrepant.  Accordingly the appellant by a letter of 30th March 1994 wrote to the respondent.  The letter exhibit 3 D 6 was appropriately headed “DISCREPANCIES IN SHIPPING DOCUMENTS PRESENTED UNDER YOUR L/C NO…….”  The letter went on to itemize seven identified discrepancies.  The discrepant document was rejected by the respondent, by letter dated 19th April 1994 exhibit 3 D 7.  By fax dated 20th April 1994 the appellant informed the correspondent bank of the respondent’s rejection of the discrepancies.  If the documents were not discrepant what must have prompted and informed the chain reaction of the two banks and the respondent.  Obviously the perception of discrepancies was not a mere cry of wolf when there was none.  A discrepancy simply means a difference between two things which ought to be identical.  Assuming there were no discrepancies, neither the appellant nor the correspondent bank is justified to fault the respondent on the issue after they, by their representations had made him to believe that they existed.  Where the documents that were held to be discrepant were neither changed nor amended, the appellant has a high mountain to climb in order to explain away their shift of position to the satisfaction of the court.  I can glean no such explanation from the evidence on record.  I would even go further to state that where the purchaser had rejected the document and thereafter what was previously thought to be discrepant was no longer found to be so, the correspondent bank was under duty not to assume powers to pass them.  Once the chain had started, the correspondent bank ought to have gone over the process and sought the mandate or clearance of the respondent through the appellant to pay the supplier.  For the fact that the appellant failed to ensure the strict compliance with the documents, the duty of care they owed the respondent was breached.  It is sad to remark that the appellants appeared to have turned themselves into a rubber stamp to endorse whatever the correspondent bank put forward without question and thereby opened themselves up to be manipulated by the correspondent bank.  Generally, the law frowns on a party who attempts to take advantage  of, or benefit from his own wrong.  It is highly deprecated as seen from the wide range of decided cases such as SCHANDORF VRS. ZEINI & ANOR. [1976] 2 GLR 418 CA.; DJOMOA VRS. AMARGYEI [1961] 1 GLR 170 SC.  From the foregoing, the least said about the collection of the discrepant documents by the respondent, the better.  Suffice it however to observe that the respondent, as soon as he found that the documents which he was made to sign for and collect were not in accord with the contract, he immediately returned them.  His signing and collecting of them was not a voluntary act.  When he went to the appellants he was merely asked to sign and collect them without anyone telling him the contents and effect of his action.  I do therefore reject the submission of counsel for the appellant on that issue.

            The appellants submissions on the question of the expiry of the L/C are that even if the correspondent bank lied in saying that they received compliant documents before the expiry date, they, the appellants cannot be held liable, and further that they satisfactorily and conscientiously conducted themselves and discharged their mandate according to the level of expectation.  I should concede that the appellants duly kept up correspondence as expected, and that for their vacillation and lack of forthrightness to identify and stick to the proper level and ethics of their profession and failure to insit           on having the conditions of the L/C complied with, they would have put themselves above board.   Upon the expiration of the L/C, it ceased any longer to be extant.  I believe neither the correspondent bank nor the appellant had power to resuscitate it by themselves, the more so since the respondent had repeatedly demanded cancellation thereof, and the appellant had indicated to him that his demand could not be met while the credit had  not yet expired and the beneficiary had not given their consent for cancellation. 

The opening of the L/C in favour of the respondent created a relationship between the bank and the respondent and also imposed on the appellant an obligation to protect and ensure the rights of the respondent.  This the appellant, not merely failed to do, they instead slept on their rights or condoned the usurpation of rights by the correspondent bank to treat the credit as still alive or extend its life.  Appellant therefore, in my judgment cannot escape liability.  Where the issuing bank puts on a garment of insensitivity to the genuine plight of the applicant and fails to cancel the credit, or insist on canceling it when it was due, the consequences of their failure cannot be whittled away by the number of letters or faxes they write or send.  The several letters the appellants wrote did not achieve the purported result and when they capitulated by accepting the so-called compliant documents several days after the expiration of the L/C the correspondent bank read in between the lines, saw the weakness or non-professional conduct of the appellants and took advantage accordingly.  The appellants attempt to urge the contrary upon us fails.  The appellate court will not set aside findings of fact of the trial judge unless they are clearly erroneous.  The appeal, on these grounds of the judgment not being supported by the evidence adduced at the trial fails and is accordingly dismissed.

            At the pain of repetition I now revert to the question of discrepancy in order to address the complaint formulated in additional ground (2) alleging that the trial judge failed to consider the appellant’s defence.  Learned counsel’s view was that if the trial court had put the shipping documents against the claims of discrepancy, it would have been realized that there were no discrepancies at all.  I have already observed above that the conduct of the appellant vis a visa the alleged discrepancies estops them from contending otherwise.  The appellants by their letter exhibit 3 D 15 of 16th May 1994 itemised to the respondent what they, the appellants perceived to be the discrepancies.  It is a fact upon the evidence that the bill of lading, for instance, mentioned Saviour Woodwork Industry, P.O. Box 13918 Accra, Ghana, Fax No. 229013 Tel. No. 227883 as the company to be notified instead of National Investment Bank A/C Narrow Fishing company Ltd.  I do not accept, upon the evidence, that the learned trial judge merely jumped to the conclusion that there were discrepancies when in actual fact there were none.  I hereby dismiss this ground for reasons already given above.

            Article 18 of the UCP 500 is in the following terms:

            “18 DISCLAIMER FOR ACTS OF AN INSTRUCTED PARTY

            (a)  banks utilizing the services of another bank or other banks for  

                  the purpose of giving effect to the instructions of the Applicant do

                  so for the account and at the risk of such Applicant.

            (b)  Banks assume no liability or responsibility should the instructions

                   they transmit not be carried out, even if they have themselves taken

                   the initiative in the choice of such other bank(s)…..”

            It was based on the above provision that appellant formulated ground 3 of the appeal and claimed that the learned trial judge had misdirected himself in faulting the appellant for paying the US $50,000 of the respondent’s money to Hyundai International Trading Corporation c.c.  The appellant’s contention here is that in so far as they, dutifully notified the respondent of the perceived discrepancies and they had furthermore communicated the respondent’s refusal to accept the discrepancies to the correspondent bank, the trial court’s finding against the appellant was not justified.  Where, in a commercial transaction or a contractual relationship a party enters a disclaimer, then that party by virtue of the disclaimer avoids liability for breach.  See the leading case of HEDLEY BYRNE & CO. Ltd. Vrs. HELLER & PARTNORS LTD. HL (964) AL 465 and also SMITH VRS. ERIC BUSH; HARRIS & ANOR. VRS. WYRE FOREST DISTRICT COUNCIL & ANOR. (1989) 2 ALL ER 614.  For a party to take advantage of a disclaimer notice however, I am of the humble view that the disclaimer must in the first place be known by the party against whom it is intended to be applied or invoked, and that party must have accepted that condition expressly or by implication.  This view becomes prominent when it is considered along side the fact that there was no direct contact between the appellant and the respondent before the L/C was issued and that UCP 500 did not seem to have been brought to the notice of the respondent at the time that the L/C was opened upon the instructions of the 1st defendant, and in the absence of the respondent.  Secondly, banking laws and practices are common knowledge, and in the bossom of banking practitioners and not the ordinary unsuspecting member of the public.  Where there is no evidence that a contract was made with the respondent in which both parties acted and accepted the disclaimer, I shudder to think that the appellate bank can effectively unvoke the provision of disclaimer against the respondent.  Parties to a contract must know, understand and accept every term of the contract.  In the instant case, I am of the view that the appellant cannot hide under Article 18 of the UCP 500 for the further reason that they failed to issue an unequivocable instruction to the correspondent bank.  The evidence shows that after they had informed the correspondent bank of the respondent’s failure to accept the discrepancies, and had gone further to instruct the correspondent bank to cancel the credit, the appellant’s woefully vacillated.  Instead of standing firmly and committed to the decision to cancel the L/C, the appellants accepted the explanation from the correspondent bank that

(a)  there were no discrepancies, and

(b)  that they had received compliant documents prior to the expiration

       of the L/C on 29th April 1994.

            In view of the above scenario, can the appellant correctly say that they issued instructions to the correspondent bank to cancel the L/C and that the latter bank failed to comply.

            What, it may be asked, were the instructions given by the appellant that the correspondent bank failed to honour.  The simple answer is that the appellant bank impliedly withdrew their earlier instructions, by their acceptance of the explanations given by the correspondent bank and that fact amounted in effect, to not giving any instructions at all.  Article 18 of UCP 500 will operate only where valid instructions were given and were not carried out.  The provision, with respect does not avail the appellants.

Equally the submissions against the award of interest, based on Art 18 of UCP 500 is dismissed.

            I will now proceed to the last ground of appeal, touching on the award of costs.

It is common knowledge that the award of costs is at the discretion of the trial judge and his exercise of discretion will not be disturbed except where it is shown that it was exercised on improper legal considerations.  In the present appeal, counsel failed to justify this ground of appeal. He failed to show in what way the costs are seen to be excessive and also did not attempt even in the least to question the trial judge’s exercise of discretion much more to impugn it.  The essence of discretionary authority is the power to choose within a range of acceptable options, whether or not courts might reach differing or even opposite conclusions on the same record.  The failure of appellant to point out any element of indiscretion in the trial court’s award of US$7,000.00 as costs renders us virtually impotent to embark upon any exercise of review.

            In totality, the appeal fails and it is accordingly dismissed.

                                                                                    G.M. QUAYE

                                                                               JUSTICE OF APPEAL

I agree.                                                                  P.K. OWUSU ANSAH

                                                                              JUSTICE OF APPEAL

I also agree.                                                                 J.A. OSEI

                                                                            JUSTICE OF APPEAL

COUNSEL  -  MR. MICHEAL AMAFU-DEI FOR THE 3RD DEFENDANT/

                        APPELLANT.

                         MR. C.B.K. ZWENNES FOR THE PLAINTIFF/RESPONDENT.

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