Hamzeh Malas and Sons v British Imex Industries

Ltd

Contract:
S&P of large quantity of reinforced steel rods.

Method of delivery & payment:

Dec 9,
1957

goods delivered in 2 installments & payment was to effected

by means of 2 confirmed LOC with Midland Bank in London

Dec 10,
1957

Pf alleging that the goods of the 1st installment were

defective
Pf applied for injunction to restrain the defendants
from drawing on the second letter of credit for
23,000 or receiving from the Midland Bank any money
under the contract
Injunction was granted to run until 2.30 p.m. on the
following day, December 10.
The defendants had until 3 p.m. on that day to present
the letter of credit to the Midland Bank and to receive
payment
Pf the in the morning applied to Ct to extend the
injunction until the rights of the parties under the
contract for sales of the goods could be
ascertained
The judge refused to do so on the ground that he had
no jurisdiction.
The plaintiffs immediately appealed to the Court of
Appeal at 12.30 p.m. against that refusal.

Held: although the court had a wide jurisdiction to grant injunctions, this
was not a case in which, in the exercise of its discretion, it ought to do so;
an elaborate commercial system had been built up on the footing that:

a confirmed letter of credit constituted a bargain between the

banker and the vendor of the goods, which imposed upon the
banker an absolute obligation to pay, irrespective of any
dispute there might be between the parties whether or not the
goods were up to contract.

While the court had jurisdiction to grant an injunction to restrain the

beneficiaries from acting on the credit, this was not a proper case; and

Sellers, L.J. suggested that "where there is a fraudulent transaction,"

the court might do so. What he meant, presumably, was that if it
could be shown that the beneficiaries were fraudulent, the court
might act to restrain them from taking advantage from the credit.