Article

Reasonable Time; Without Delay.

Note:

The Supreme Court of New York, Appellate Division, First Department affirmed, in a two paragraph opinion, the trial court's award of damages based on a jury verdict against the issuer in an action against the beneficiary for wrongful dishonor. In so doing, the court rejected the issuer's contentions that the beneficiary was not entitled to a jury trial and that the questions submitted to the jury were improper. Additionally, the court ruled that a bank which processes a draw under a standby letter of credit within three banking days has not, as a matter of law, under all circumstances acted within a reasonable time. The court further noted that, as letters of credit are independent of the underlying contract, it was appropriate to preclude the issuer from presenting evidence on actual damages.(*1)

(*1) For further reading on the facts and arguments presented in this case see 1996 Annual Survey of Letter of Credit Law & Practice 437 (summarizing the facts and issues of this case as presented in the court's decision on summary judgment); 1997 Annual Survey of Letter of Credit Law & Practice 578 (containing the full text of the issuer's appellate brief).

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