Article: Letter of credit beneficiary beats issuing bank based on conforming documents and untimely and improper dishonor.(Credit Column)

Introduction

A letter of credit issuing bank must pay a letter of credit beneficiary that presents documents conforming with the requirements of the letter of credit. By the same token, the bank can refuse to pay on a letter of credit where the beneficiary presented noncomplying documents. However, that right comes with strings: the bank must have given proper and timely notice of dishonor, including identifying all documentary discrepancies and notifying the beneficiary that the bank is holding the documents at the beneficiary's disposal or returning the documents to the beneficiary. A bank that messes up by failing to follow any of these rules may be forced to ...

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