The circumstances under which the banks can disclaim responsibility and repudiate liability under the provision of UCPDC

Disclaim of Responsibility of Banks. There are certain provisions in the UCP absolving the bank involved in the transactions from the responsibility on certain contingencies:

1. Article 3. Credits, by their nature, are separate transactions from the sales or other contracts on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the credit.

2. Article 4. In credit operations all parties concerned deal in documents, and not in goods, services and/or other performance to which the documents may relate.

3. Article 15. Banks assume no liability or responsibility for the form, sufficiency , accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed  thereon; nor do they assume any liability or responsibility for the description , quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions , solvency, performance or standing of the consignor, the carriers, or the insurers  of the goods, or any other person whomsoever.

It is evident from the above article that though the banks are under obligation to examine the documents, they do not guarantee their genuineness. If on the face of it the document appears to be forged, the bank would refuse payment against it. But if the forgery is not apparent, the negotiating bank and the issuing bank have paid against them without negligence on their part, they stand absolved of responsibilities.

However, it may happen that the forgery of the documents is found by the issuing bank before the reimbursement is made to the negotiating bank. In such cases, the negotiating bank cannot insist on reimbursement by the issuing bank but can have recourse against the person who has tendered forged documents.

4. Article 18 (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).

5. Article 16. Banks assume no liability or responsibility for the consequences arising out of delay and or loss in transit of any messages, letters or documents, or for delay, mutilation or other errors arising in the transmission of any telecommunication. Banks assume no liability or responsibility for errors in translation or interpretation of technical terms, and reserve the right to transmit credit terms without translating them.

6. Article 17. Banks assume no liability or responsibility for consequences arising out of the interruption of their business by acts of God, riots, civil commotions , insurrections, wars or any other causes beyond their control, or by any strikes or lockouts. Unless specifically authorized, banks will not, upon resumption of their business, pay, incur a deferred payment undertaking, accept drafts or negotiate  under credits which expired during the interruption of their business.

7. Article 13 (c). If a credit contains conditions, without stating the document(s) to be presented in compliance therewith, banks will deem such conditions as not stated and will disregard them.

8. Article 45. Banks are under no obligation to accept presentation of documents  outside their banking hours.