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SAMPLE ANSWER FOR SAMPLE EXAMINATION

BTxxxxxx INTERNATIONAL TRADE LAW

Please note that this answer is NOT meant to be perfect answer.  It is just an example of how students in the past have answered examination questions.  

QUESTION ONE

The buyer (EnergySave) has received the shipping documents in return for accepting the bill of exchange.  This means that the buyer has the right to demand from the carrier delivery of the goods described in the bill of lading as the buyer is the lawful holder of the bill under section 8 of the Sea Carriage Documents Act.

The bill of exchange has been accepted by the buyer (drawee) and is payable 30 days after acceptance.  The buyer therefore has a legal obligation arising from the bill of exchange to pay upon the maturity date of the draft.

However, the buyer (drawee/ acceptor of the draft) may argue that the draft is invalid for uncertainty.  A bill of exchange must demand payment of a “sum certain”.  The sum payable in the case of this draft is “S$1,250 plus interest at the rate of 8.5% per cent per annum until arrival of payment in Sydney”.  The problem stems from the fact that arrival of the payment in Sydney is not certain to occur.   The payment may never arrive.  If the arrival of payment is not certain to occur, then there is no certainty that interest can be calculated.  Therefore the document is not a true bill of exchange under section 8 of the Bills of Exchange Act 1909 (Cth).

This case is similar to Rosenhain v Commonwealth Bank of Australia (1922) 31 CLR 46.  In that case, the alleged “bill of exchange” contained the following terms: … 60 days after sight … pay to the order of … with interest at the rate of 8 per cent per annum until arrival of payment in London’.  Rosenhain (the drawee) accepted the ‘draft’ but refused to pay it on maturity.  The bank’s action against Rosenhain depended on whether the ‘bill’ was really a ‘bill of exchange’ under s 8 of the bills of Exchange Act 1909 (Cth).  The court said:

        “… the document under consideration did not fix a ‘determinable future time’ for payment of the sums mentioned therein but a fixed time, namely ’60 days after sight’.  Consequently the sum must be certain at this fixed time if it is to conform to the provisions of the Bills of Exchange Act.  But clearly the sum was not certain on that date, nor could it be made certain from anything appearing on the face of the document; for interest was to run from the time fixed for payment, namely 60 days after sight, until arrival of payment in London, and it was quite uncertain, both on the face of the document and in fact, when this even would happen or indeed whether it would happen at all”.