BII Finance Co. v. U-States Forwarding Services Corp. [2002]

Factual Summary:

Beneficiary of an LC obtained a bill of lading from Carrier’s Agent that read consigned “To Order” without specifying a named person. The bills of lading were issued by a California corporation and stated that they were subject to the Carriage of Goods by Sea Act and the International Convention for the Unification of certain rules of law relating to bills of lading as amended by the “protocol” signed at Brussels February 23, 1968 (Visby Rules or Hague-Visby Rules). In order to finance its operation, Beneficiary assigned its rights under the LC to financing company and endorsed and delivered to it the bills of lading and other documents required by the LC. When the documents were presented to Issuer, it dishonored due to discrepancies.

Unbeknownst to the financing company, Beneficiary authorized release of goods to Applicant/Buyer without requiring presentation of the bills of lading subsequent to the assignment of the LC rights and the endorsement and delivery of the bill of lading.