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Note:In three actions that were consolidated, three beneficiaries, Win Spark Trading Co., Pearl Textiles Far East Ltd., and Truebright Co. Ltd., sued Century Business Credit Corp., the issuer of an LC together with others for its failure to honor a letter of credit on theories of fraudulent misrepresentation, conspiracy, and violation of the RICO statute against organized crime. However, the beneficiaries in their amended complaints admitted that they failed fully to comply with the express terms and conditions of the LC and the defendants moved for summary judgment.

In opposing the motion, the beneficiaries argued that extrinsic circumstances affected their ability to comply with the express conditions and terms of the LC. As a matter of law, the U.S. District Court for the Southern District of New York, Rakoff, J., found the beneficiaries' excuses were "unavailing" and granted the motion. Citing relevant case law, the court applied the doctrine of strict compliance in the absence of actionable fraud whose absence also justified dismissal of the RICO claim.

The court also rejected the beneficiaries' argument that the subsequently insolvent applicant had acted as the agent for the issuer in waiving the requirement that the documents strictly comply with the LC terms or in promising amendment of the credit. The court noted that "there is not a single factual allegation whatsoever that can be read to support the legal conclusion that [the applicant] had any actual or apparent authority to make these representations on behalf of the issuer...."

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