Unconscionability as an Exception to the Independence Principle: A Study of Singaporean Caselaw

47 Pages Posted: 9 Oct 2010  

M. Hasan Aijaz

George Mason University, Antonin Scalia Law School, Students/Alumni

Date Written: October 8, 2010

Abstract

This papers studies the development, existing status, and suggests a course of development for the independence principle in Singapore. The independence principle is one of the defining characteristics of letter of credit law and ensures that the letter of credit remains true to its origin as a cash replacement. Inroads on the independence principle have been made in most jurisdictions to varying extent through the exception of fraud from the principle such that fraud in the underlying contract may work to vitiate the efficacy of a call on the letter of credit. The independence principle is in tension with the fraud principle in most jurisdictions with the scope of the exception often being misapplied or constantly changing. In Singapore and other jurisdictions the independence principle has further been eroded with the introduction of a second exception, unconscionability, which operates to vitiate the efficacy of a call on the letter of credit in various nebulously defined scenarios. This paper tracks how this exception arose and discusses doctrinal methods to maintain the vitality of the independence principle without overturning significant caselaw.

Keywords: letters of credit, Singapore, independence principle, fraud, unconscionability

Suggested Citation

Aijaz, M. Hasan, Unconscionability as an Exception to the Independence Principle: A Study of Singaporean Caselaw (October 8, 2010). Available at SSRN: https://ssrn.com/abstract=1689309 or http://dx.doi.org/10.2139/ssrn.1689309

M. Hasan Aijaz (Contact Author)

George Mason University, Antonin Scalia Law School, Students/Alumni ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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