RE: Cancellation of Drawing Arrangement Agreement between COMPANY 1 and BANK 1.
We refer to your letter no. ……………. dated November 30, 2006 on the above subject.
From perusal of your letter it is apparent that Bank 1 and COMPANY 1, UK (“the Exchange Company”) executed a Drawing Arrangement Agreement on 23 January 2006. Before that the remittance arrangement was approved by Bangladesh Bank vide their letter dated 13 December 2005. BANK 1 Private Telegraphic Test-Key was exchanged with the Exchange Company, for sending/receiving authenticated message, by BANK 1’s letter dated 8 March 2006. Addendum to the Drawing Arrangement Agreement was executed on 23 March 2006. As per requirement of Bangladesh bank as well as per terms of the Drawing Arrangement Agreement, the Exchange Company has furnished security deposit in the form of F.C. term deposit for US$ 50,000/- with the Motijheel Branch of BANK 1. The Exchange Company is also maintaining minimum balance of BDT 1,000,000/- in their non-resident non convertible taka account (NRT Account) with BANK 1’s Motijheel branch.
The Exchange Company commenced remittance on 2 March 2006 and continued sending remittance up to 29 March 2006.
Thereafter, Mr. X, Managing Director of the Exchange Company informed BANK 1 that the exchange rates provided by BANK 1 were not attractive to them. Subsequently, Mr. X vide his letter dated 28 October 2006 requested BANK 1 to terminate the Drawing Arrangement Agreement and refund the Security Deposit and Balance in their NRT Account. The Exchange Company has also returned the BANK 1 Private Telegraphic Test-Key along with this letter.
In these circumstances you require our legal opinion about the necessary documents to be executed between the parties for the termination to take place, if any, and also the steps needed to be taken to protect the interest of BANK 1 and to avoid any future risk and responsibility on the part of BANK 1. You want us to give special consideration to the following facts:
1. Acceptance of remittance by the Exchange Company from the general public by showing Drawing Arrangement Agreement with BANK 1 and Bangladesh Bank’s approval letter dated 25 December 2005.
2. Any misuse of BANK 1 Private Telegraphic Test-Key.
3. Any misuse of BANK 1’s name and logo, etc.
On perusal of the Drawing Arrangement Agreement, it appears that Clause 7.10 contains the termination terms of the contract. According to this clause the Agreement may be terminated by either party by giving 3 months prior notice of termination in writing to the other party. But prior to the termination of the Agreement, the claims of both parties shall have to be fully settled by the other party.
The Exchange Company vide their letter dated October 28, 2006 has asked BANK 1 to terminate the Agreement and refund the Security Deposit and Balance in their NRT Account. The Exchange Company has also returned the BANK 1 Private Telegraphic Test-Key along with this letter. In our opinion, this letter appears to be the termination notice given in accordance with Clause 7.10 and as such the Agreement will terminate 3 months from the receipt of this letter by BANK 1.
No documents need to be executed between the parties for the termination to take place, but BANK 1 should send written acknowledgement of this termination notice. In this acknowledgement letter (if an acknowledgement has already been sent then BANK 1 should send another letter) BANK 1 should ask the Exchange Company:
- to stop receiving any remittance from the general public by referring to the Drawing Arrangement Agreement with BANK 1.
- to stop the use of and destroy any copy of BANK 1 Bank Private Test Keys lying with the Exchange Company.
- to stop the use of BANK 1’s name, logo etc in any branch of the Exchange Company.
- to return all confidential information in connection with BANK 1.
- to pay all outstanding amount due to BANK 1 from the Exchange Company in relation to the Agreement.
In this letter BANK 1 should also state that they will refund the Security Deposit and Balance in the NRT Account only after the Exchange Company has given an undertaking regarding the above matters.
BANK 1 should also inform Bangladesh Bank that they have terminated the remittance arrangement with the Exchange Company and ask Bangladesh Bank to withdraw their approval letter dated 25 December 2005.
If you have any further inquiries please do not hesitate to contact us.
For: “The Lawyers & Jurists”