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Courtaulds North America, Inc. v. North Carolina National Bank

United States Court of Appeals for the Fourth Circuit
528 F.2d 802 (1975)


Facts

Adastra Knitting Mills, Inc. (Adastra) planned to purchase a large amount of imported yarn from Courtaulds North America, Inc. (Courtaulds) (plaintiff). Adastra instructed its bank, North Carolina National Bank (the Bank) (defendant), to issue a letter of credit for the transaction. The letter of credit authorized Courtaulds to make drafts on Adastra’s bank account to pay for the yarn. By the terms of the letter, Courtaulds could draw on Adastra’s account by presenting an invoice. The letter of credit had several specifications, including that the invoice had to read “100% acrylic yarn.” When it came to the final delivery of yarn, the bank refused to pay the requested $67,346.77 to Courtaulds because the invoice did not properly read “100% acrylic yarn.” Instead, the invoice read, “imported acrylic yarn.” As with prior shipments, the invoice was stapled to a packing list that described the yarn as “100% acrylic.” The Bank asked Adastra to waive the minor discrepancy, but Adastra could not because it had just filed for bankruptcy. Therefore, the Bank did not pay Courtaulds. The district court held that the Bank should have paid Courtaulds because the invoice and packing list, when read together, satisfied the letter of credit terms. The Bank appealed.

Rule of Law

Issue

Holding and Reasoning (Bryan, J.)

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