Private Law
Mohammad Arian
Abstract
Fraud as an exception to the principle of independence of documentary credit from the underlying contract is one of the key challenges facing the issuing bank, which in particular has been more the center of attention in deferred payment letter of credits. In case, the proceeds of the credit are assigned ...
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Fraud as an exception to the principle of independence of documentary credit from the underlying contract is one of the key challenges facing the issuing bank, which in particular has been more the center of attention in deferred payment letter of credits. In case, the proceeds of the credit are assigned to third party by the beneficiary through the discount of the credit and it is later discovered that the beneficiary had committed fraud, so in such a case, this question arises whether in Iranian legal system, the third party assignee shall be immune from the effects of fraud committed by the beneficiary? In this regard, some believe that according to the general rule that "no one can transfer to another more rights than he has", the assignee of proceeds shall not be immune from the effects of fraud. From a comparative law perspective, there are two profoundly different approaches concerning the impact of fraud on the rights of the assignee of proceeds. According to the first approach accepted in the English legal system, an assignee of proceeds shall not be immune from fraud, even if it is considered as a bona fide holder. However, according to the second approach which is reflected in Section 109 of Article 5 of the US Uniform Commercial Code, the assignee shall be immune from fraud on condition that it is considered as a bona fide holder. In Iranian legal system, although there is no specific law in the field of documentary credits, such a person must be immune from the effects of fraud having regard to the banking practice, case law, and legal doctrine, as this is requisite for maintaining the commercial utility of letter of credit as an important financing mechanism.
Morteza Shahbazi Nia; Mohammad Isaei Tafreshi; Kourosh Kaviani; Esmaeil Faraji
Abstract
Sometimes people establish Commercial companies to pursue their fraudulent purposes under the veil of legal personality of the company. The law of Iran has not predicted a solution for this legal dilemma. In other legal systems such as English legal system, the courts confront these kinds of fraudulent ...
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Sometimes people establish Commercial companies to pursue their fraudulent purposes under the veil of legal personality of the company. The law of Iran has not predicted a solution for this legal dilemma. In other legal systems such as English legal system, the courts confront these kinds of fraudulent acts under the famous doctrine of “Piercing the Corporate Veil” by authorizing the creditor of the company which assets are not sufficient to compensate the credit, to withdraw the limited liability rule and recover its respective claims from the assets and property of the fraudulent partner)s). In this research, we try to investigate and recognize this concept in the Law of Iran. The result of this research shows that within the English legal system, fraudulous use of the commercial company form will undoubtedly entail to the withdrawal of the corporate veil and unlimited liability of the fraudulent partner(s); however, some matters such as the legal sanctions, and also the concept of unfair actions, are still under dispute. As a result of this research it is also indicated that in our domestic legal system relying upon the doctrine of “fraud” it is possible to impede the validity of fraudulent acts of partner(s) and exceptionally rule on the unlimited liability of these people towards the company creditors.