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Benetton Services Corp. v. Benedot, Inc.

551 So. 2d 295 (1989)

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Benetton Services Corp. v. Benedot, Inc.

Alabama Supreme Court
551 So. 2d 295 (1989)

RW

Facts

Benetton Services Corporation (Benetton) (defendant) and Benedot, Inc. (plaintiff) contracted for the sale and purchase of clothing. Pursuant to the contract, Benedot obtained an irrevocable letter of credit from Southland Bank of Dothan (Southland). The letter of credit assured Benetton that Southland would pay for the clothes on Benedot’s behalf and charge the payment to Benedot’s Southland account. The letter of credit was subject to interpretation under Alabama’s version of Uniform Commercial Code (UCC) Article 5. Upon delivery, Benedot found that the clothes did not conform to contract specifications. Benedot sued and obtained a trial court’s temporary restraining order (1) enjoining Benetton from demanding payment on the letter of credit, (2) enjoining Southland from honoring any such demand, and (3) requiring Southland to escrow the money that was subject to the letter of credit. Benetton appealed to the Alabama Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Shores, J.)

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