It is clear from the U.C.P., and accepted by the judges in Banker’s Trust, that, having received documents, the issuing bank is required to do two things. First, it must examine the documents to ascertain whether they conform to the credit, and, secondly, determine what course of conduct to pursue if any discrepancies are found. Article 16(c) states that the issuing bank has a “reasonable time” in which to so examine and determine;3 art. 16(d) inter alia prescribes the form a communication of rejection must take; and art. 16(e) provides that non-compliance with paras. (c) and (d) precludes the issuing bank from claiming that the documents are not in accordance with the credit. The Court of Appeal in Banker’s Trust was required to consider whether a communication of rejection was adequately phrased so as to be effective. However, the most significant legal question discussed was what precisely an issuing bank is entitled to do by way of arriving at a determination or, as the question was put by counsel and judges, “a reasonable time for what?”

Article 16(b) states that, if the examination conducted by the issuing bank reveals that the documents do not conform, “it must determine, on the basis of the documents alone” whether to accept or reject. It was not in dispute that “it” may be construed only as referring to the issuing bank, upon which the duty to determine unequivocally rests. In discharging this duty, however, is it legitimate for the bank to consult with the applicant for the credit to ascertain whether it will be prepared to overlook the discrepancies identified by the bank and, if so, may the bank, in the context of such consultation, send the documents to the applicant? Going one step further, may the bank pass the documents over for the applicant to conduct an independent examination to ascertain whether any additional discrepancies are present? The Court of Appeal answered the first question in the affirmative and