BANK MELLI IRAN v. BARCLAYS BANK (DOMINION, COLONIAL & OVERSEAS).

[1951] 2 Lloyd's Rep. 367

KING'S BENCH DIVISION.

Before Mr. Justice McNair.

Banking-Documentary credits-Payment against documents-Confirmed credit opened by British bank under instructions of foreign bank-Need for strict conformity with mandate-Principal and agent-Ratification-Purchase by E. Ltd. on behalf of K. (Persian national) of 100 new Chevrolet trucks, part of surplus stores being disposed of by U.S. Foreign Liquidation Commissioner -Instructions given by Persian bank to British bank to open confirmed credit for £45,000 in favour of E. Ltd.- Payment of £40,000 authorized against presentation of delivery order, invoice, policies in name of Persian bank, and U.S. Government undertaking confirming that trucks were new-Payment of balance of £5000 (on account of freight, insurances, etc.) authorized against on board bills of lading (indorsed to order of Persian bank), freight, insurance, etc.-Invoices tendered in respect of 100 Chevrolet trucks "in new condition" -Certificate issued by U.S. Government official that purchase had been made of 100 "new, good" Chevrolet trucks- Delivery order describing trucks as "new-good"-Payment of £40,000 made by British bank against documents tendered - Action brought by Persian bank alleging that payments had not been made in accordance with their instructions and claiming a declaration that British bank were not entitled to debit Persian bank with sums paid-Plea by British bank that payments had been made in accordance with the instructions of the Persian bank; further, that Persian bank had ratified such payments-Relationship between Persian and British banks considered - Evidence of course of action taken by Persian bank after receipt of documents against which British bank had paid.