Welsh Development Agency v Export Finance Co Ltd (1992) BCLC 148, (1992) BCC 270, CA
In this case the court was asked whether a transaction relating to goods between an exporter and the defendant financier, associated with sales by the exporter to third-party purchasers, amounted to a true sale by the exporter to the defendant or was merely a loan by the defendant to the exporter secured on the goods or their proceeds.
The court referred to "external" and "internal" routes to the construction of commercial documents. The external route, is to show that the written document does not represent the agreement of the parties and is a sham. The second is the internal route, where only the written agreement is analysed in order to ascertain from its terms whether it amounts to a transaction of the legal nature which the parties ascribe to it.
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