LML4807 EXAM PACK ANSWERS () AND 2020 BRIEF NOTES-BEST FOR EXAM PREP.

LML 4807 BANKING LAW EXAM MEMO 1. Name and explain the roles of the various parties involved in documentary letters of credit. Depending on the circumstances a large number of different parties may be involved in a letter of credit. These include: -The applicant This is usually the buyer(importer) in terms of the contract of sale and who applies to the issuing bank for the issuance of the letter of credit. -The issuing bank or opening bank This bank issues or opens the letter of credit. The issuing and opening banks are usually one and the same bank, but that is not necessarily the case. Occasionally an opening bank approaches an issuing bank on behalf of the applicant to issue a letter of credit, in such a case the opening bank merely acts as messenger and does not assume any liability on the credit. Usually the issuing or opening bank is situated in the same country as the applicant or buyer, and the latter is usually an existing client of the issuing or opening bank. The issuing or opening bank assumes independent and separate liability toward the beneficiary on the letter of credit. -The Beneficiary According to the letter of credit the beneficiary is the party in whose favour the credit is issued. Usually the beneficiary is the seller (exporter) in terms of the contract of sale. -The advising or notifying bank Merely acts to advise or notify the beneficiary of the issuance of the letter of credit. Often the advising or notifying bank and the issuing bank are co-subsidiaries of the same holding company (bank). Alternatively, they may simply be branch offices of a correspondent bank of the issuing or opening bank. Usually they are situated in the same country as the beneficiary. The advising or notifying bank does not bind itself toward the beneficiary for the payment on the credit. -The confirming bank Confirming banks are only involved in the case of confirmed letters of credit and never in the case of unconfirmed letters of credit. The confirming bank is usually situated in the same country as the beneficiary. The confirming bank assumes a separate and independent liability on the credit in favour of the beneficiary. -The presenting bank Acts as a courier bank for the beneficiary in presenting the shipping documents to the issuing bank and does not assume any liability for the letter of credit. -The collecting bank The collecting bank is appointed by the beneficiary to collect payment on its behalf from the issuing, confirming or paying bank, as the case may be. -The paying or nominated bank The bank is appointed by the issuing or confirming bank to effect actual payment to the beneficiary. The paying bank does not assume any independent and separate liability toward the beneficiary, but only toward the bank that has appointed it to pay the beneficiary. The paying or nominated bank therefore acts as the payment mandatory of the issuing or confirming bank. Question 2 (a) Our courts have described a fixed deposit as a loan to a bank repayable on a certain date (the maturity date), usually bearing interest. Discuss the legal position where a customer needs the amount of a fixed deposit before the maturity date of the deposit. (10) (b) S When a customer makes a deposit at a bank over the counter, he will receive a deposit slip, which amounts to an admission of receipt by the bank and as such would serve as an evidential advantage to the customer in the event of a dispute. Discuss in detail whether this is also the position in respect of auto teller deposits. (10) The answer is No they are different because of the following  The transaction slip supplied by the machine has no evidential value, because it is simply a record of what the customer has keyed into the machine.  A question that may be important is whether the payment takes place when the deposit amount is inserted into the machine, or only when the deposit envelope is opened and its contents are accepted by the bank.  With a cheque it is clear that payment only takes place when the cheque is honoured.  When cash is deposited into an atm. It seems that payment of such amount takes place only when the contents of the envelope are removed by the bank official.  If this view is correct, only a contract of deposit (depositum) exists while the envelope is in the auto teller.  As banks receive amounts on loan, it is better to regard it as deposit for reward. X is an entrepreneur and the owner of various businesses. X's businesses include, amongst others, the following: 1. XFinancial Safe Services which offers safekeeping facilities for clients for small amounts of cash against a fee;