Abstract:
The law is influenced by the changing circumstances of society; hence it is never static. Likewise, the laws regarding international payment methods have been influenced by the changing circumstances and practices of merchants. However, the introduction of technology through electronic means of communication and payment has faced resistance from the courts as the law remained static. This research explores how the law has been a stumbling block to the development of electronic commerce in international trade. The payment methods in international trade have been predominantly based on traditional (paper-document) letters of credit and physical cash transfer. In many jurisdictions, paper-based letters of credit have been afforded statutory recognition for instance in areas of negotiability, but the same cannot be argued for electronic data intended to represent a letter of credit. This resulted in lack of trust in electronic transfers and fear of the risks that might come with electronic letters of credit. The main legal obstacles to full acknowledgment of electronic letters of credit are; authentication of electronic documents; lack of legal recognition by the courts due to their nature (that is, data messages) and lack of recognition in the laws of contracts (digital signatures, digital contracts), just to mention a few. This research will critically analyse the evidential implications of the use of electronic letters of credit in international trade and illustrate the functional equivalence of electronic letters of credit as to those of traditional letters of credit. This research supports the notion that if courts around the world were to embrace the advancement of technology and benefits that come with it, trade procedures will be simplified and harmonised. Ultimately, this research intends to encourage full use of electronic letters of credit, which are more efficient, accurate and saves time.
