3M Co. v. HSBC Bank USA, N.A.
United States District Court for the Southern District of New York
95 U.C.C. Rep. Serv. 2d (Callaghan) 896, 2018 WL 1989563 (S.D.N.Y. Apr. 25, 2018)
3M Company (plaintiff) was a subcontractor on a project for the Turkish government (PTT). The project’s service agreement required 3M to post a $1 million letter of credit in favor of Vendeka Bilgi Teknolojileri Ticaret Ltd. (Vendeka), the prime contractor, as a performance guarantee. At 3M’s request, HSBC Bank USA, N.A. (defendant) issued a $1 million standby letter of credit in favor of the bank Turkiye Cumhuriyeti Ziraat Bankasi (Ziraat). The letter stated that Ziraat would issue a $1 million letter of credit to the bank Aktif Yatirim Bankasi (Aktif) and would request that Aktif issue a guarantee in favor of PTT for $1 million. The HSBC letter’s stated purpose was to guarantee Vendeka’s performance on the project. The HSBC letter originally provided that Ziraat could demand payment by certifying that Ziraat had received a demand for payment on Ziraat’s letter of credit to Aktif and that the demand was made due to the performance guarantee in the service agreement. However, at Ziraat’s request and with 3M’s approval, HSBC subsequently amended the letter to remove the reference to the service agreement. Instead, Ziraat could draw on the HSBC letter of credit if Ziraat certified that Aktif had demanded payment on Ziraat’s letter of credit. PTT subsequently replaced Vendeka with another contractor, which posted its own performance guarantee. Later, however, PTT made a demand on the Aktif letter posted to guarantee Vendeka’s performance. Aktif thus demanded payment on the Ziraat letter, and Ziraat demanded payment on the HSBC letter. 3M sought a preliminary injunction to prevent HSBC from paying, asserting that Ziraat’s demand was fraudulent.
Rule of Law
Holding and Reasoning (Gardephe, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 709,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 709,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.