Continental Time Corp. v. Merchants Bank of New York
New York Supreme Court
459 N.Y.S.2d 396 (1983)
Continental Time Corporation (Continental) (plaintiff) received an irrevocable letter of credit as payment for an approximately $236,000 shipment of watches. Under the letter of credit’s terms, (1) Continental needed to present the letter and certain documents from the shipment to Credit Suisse to receive payment and (2) Credit Suisse’s obligation to pay the amount could be revoked only with the agreement of all parties. Merchants Bank of New York (Merchants) (defendant) was Continental’s bank. On Continental’s behalf, Merchants presented the letter of credit and shipping documents to Credit Suisse as a documentary draft, requesting payment of the $236,000. Credit Suisse noticed that a shipping airbill in the supporting documents did not list the departing or arriving airports and rejected the payment request due to the noncompliant document. At that point, because the letter of credit was irrevocable, Continental had a right to fix the airbill and resubmit the letter. However, without permission from Continental, Merchants revoked the letter of credit on Continental’s behalf and authorized Credit Suisse to request new payment from the watch buyer. Thus, the letter of credit was revoked and became invalid. But the buyer refused to provide new payment, leaving Continental with no money for the sale. Continental sued Merchants for negligence, for violating the Uniform Commercial Code (UCC), and for violating the Uniform Customs and Practice for Documentary Credits (UCP). Continental then moved for summary judgment on its claims.
Rule of Law
Holding and Reasoning (Blyn, J.)
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