A survey published by the American Bar Association (ABA) highlights the most important developments of 2023 dealing with letters of credit (L/Cs), domestic and international sales of goods, personal property leases, payments, documents of title, investment securities, and secured transactions.

Alongside descriptions of interesting judicial decisions highlighted in the survey, The Uniform Commercial Code Survey looks at legislative progress in several areas, for example the 2022 amendments to the Uniform Commercial Code (UCC) that have been adopted in twenty-four US states plus the District of Colombia and introduced in five states.

Decisions concerning L/Cs

The survey also reports on several decisions made in US courts concerning L/Cs during the year. Some of the reported cases involved unsuccessful attempts to obtain court injunctions against drawing on L/Cs.

As the survey reports, "[f]ew US cases enjoin beneficiaries from presenting and issuers from honouring complying drawings under L/Cs based on claims of forged or materially fraudulent presentations because applicants must meet all section 5-109 conditions to obtaining injunctive relief for fraud and the non-prevailing party must pay its own, the issuer's, and beneficiary's attorneys' fees."

Showing irreparable harm

In one of the reported cases, an obstacle presented to injunctive relief was the requirement to show irreparable harm. In the case, a commercial tenant of a warehouse lease posted an L/C to secure the lease.

After discovering damage to its property and moving out, the tenant filed a lawsuit and also sought to enjoin the landlord from drawing on the L/C. The court denied the injunction, based on the failure of the tenant to show it would suffer irreparable injury which was not redressable by a claim for monetary damages.

More information on The Uniform Commercial Code Survey written by Jennifer S Martin, Colin Peter Marks, and Wayne R Barnes and published by the ABA can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.