To ensure enforceability of a coffer agreement (or added instrument), it is important to accede carefully with any assigned anatomy or diction requirements for acknowledged communications apropos to that instrument.
The altercation complex a letter of appeal beatific by Santos Limited (Santos) to BNP Paribas, requesting acquittal beneath a coffer agreement for $55 actor issued by BNP Paribas (on account of Fluor Corporation) in favour of Santos (the Coffer Guarantee).
The Coffer Agreement assured that BNP Paribas was answerable to pay $55 actor to Santos if BNP Paribas accustomed a letter of appeal “in the anatomy of the letter absorbed to this Coffer Agreement (amended as applicable) purporting to be active by an authorised adumbrative of the Beneficiary”.
In the abstract anatomy letter annexed to the Coffer Guarantee, the words “Authorised attestant of Santos Limited” appeared beneath the sender’s signature (see Item 1 below).
Santos issued a letter of appeal for an bulk of $55 million. The letter of appeal was active by Santos’ General Manager of Development, Mr Simpson. The company’s name and Mr Simpson’s position appeared beneath his signature (see Item 2 below). However, the words “Authorised attestant of Santos Limited” were not included.
Santos after requested acquittal of $55 actor from BNP Paribas, who banned to pay on the area that the letter of appeal did not accede with the anatomy of the abstract letter annexed to the Coffer Guarantee. Santos could not affair a new letter of appeal because the Coffer Agreement had expired.
The balloon adjudicator captivated that the letter of appeal beatific by Mr Simpson did not activate BNP Paribas’ obligation to pay Santos $55 actor beneath the Coffer Guarantee. The Court of Appeal upheld the balloon judge’s accommodation and absolved Santos’ affirmation (see Court’s acumen below).
Comparison of assigned anatomy letter and the letter beatific by Santos:
The Court of Appeal accustomed the balloon judge’s reasoning, absorption on the bartering purpose(s) of instruments such as coffer guarantees as interpreted from the perspective/standard of a reasonable business person.
Importantly, it was acclaimed that there was annihilation at law that absolutely requires any accurate anatomy of beheading of a bartering instrument. However, the words “in the anatomy of the letter attached…purporting to be active by an authorised adumbrative of the Beneficiary” which were included in the Coffer Agreement had to be carefully followed.
The Court of Appeal captivated that these words “relieves the issuer of the call to attending aloft whether the affair authoritative the appeal has met the agreement of the coffer guarantee”. This, accompanying with the actuality that a coffer agreement is advised “as acceptable as cash”, meant that the Court advised an absolute representation of the sender’s ascendancy was all-important to advocate the purpose of the Coffer Guarantee. Specifically, a bright representation of ascendancy was an “essential feature” for any letter of appeal beneath the Coffer Agreement (as against to abeyant non-essential elements, e.g. use of “Yours faithfully” rather than “Yours sincerely”).
The Court of Appeal assured that there was no bright representation that Mr Simpson was an authorised adumbrative of Santos for the purposes of active a letter of appeal beneath the Coffer Guarantee, alike though: (i) the letter was issued on Santos’ letterhead; (ii) “Santos Limited” appeared aloft Mr Simpson’s signature; and (iii) Mr Simpson’s position was acutely stated.
The Court articular that the aloft “merely adumbrated that he captivated a accurate position in the aggregation and said annihilation as to his ascendancy in that role. The letter of appeal independent no account of his ascendancy to assurance on Santos Limited’s behalf”.
While the exact words “Authorised attestant of” did not charge to be absolutely declared for the letter of appeal to accept been valid, Mr Simpson’s ascendancy had to be acutely manifested.
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