Fortune International Bank Plc Vs Pegasus Trading Office (Gmbh) (2004)

LAWGLOBAL HUB Lead Judgment Report

UWAIFO, JSC 

The plaintiffs (two German companies) sued the defendants for breach of contract arising from two letters of credit (LCs) opened by the 1st defendant bank at the instance of the 2nd defendant in favour of the plaintiffs for the importation of dairy product known as “Royal Evaporated Milk.” The LCs were confirmed irrevocable up to 35% of their value. This meant that the amount involved was to be paid at sight. As to that, there is no dispute; the 35% cost of the goods was accordingly paid. The difficulty was with the 65% of the LCs which by description was unconfirmed irrevocable. The amount involved was to be paid by the 1st defendant/bank 90 days after presentation of documents to it. That amount was not paid hence the plaintiffs (the sellers of the goods) sued the 1st defendant/bank (the issuing bank) and the 2nd defendant (the buyer) claiming as follows:

(a) Cost and value of goods supplied……….. DM540,000

(b) Legal action in Germany ……………… DM 11,663

(c) Transportation from Germany to Nigeria and total expenses for seven trips ……………. DM 25,000

Total DM576,663

In addition, interests were claimed thus: 11.5% per annum on DM540,000 from 1/5/1992 — 31/4/1995 (DM 186,300); 11.5% per annum from 1/5/1995 up to date of judgment; and 10% per annum from date of judgment until the settlement of the judgment debt.

On 12 October, 1998, the learned trial judge dismissed the action against the 1st defendant/bank but found against the 2nd defendant and entered judgment as follows:

(i) Principal debt DM540,000

(ii) Transport expenses 25,000

(iii) Interest up to 30/4/1995 at 11.5% p.a. 186,300

DM 751,300

(iv) 10% p.a. on judgment debt till liquidated.

(v) Costs against 2nd defendant DM 5,000