Current Law Cases

Scope	Letter of credit; fraud suspected by bank but not alleged; whether bank entitled to refuse payment
Case	Society of Lloyd's v Canadian Imperial Bank of Commerce
Court	(QBD) Queens Bench Division
Jurisdiction	UKEW
Judgment
Judges	Saville, J.
Legislation
Reported	[1993] 2 Lloyd's Rep. 579
Reference
Abstract	A beneficiary claimed against a bank under a letter of credit. The bank claimed that it was entitled to decline to pay if, while not alleging actual fraud by the beneficiary, it had material which would have led a reasonable banker to believe or infer that there was fraud. Held, that (1) it was no defence to plead the matters alleged, which would have cast the burden of proving the absence of fraud on a beneficiary. The letter of credit transaction was independent and it was irrelevant that the bank might later be liable to its customer; (2) the position was no different whether the document was a documentary letter of credit, a performance guarantee or a standby letter of credit.
Subject	Banking and finance
Keywords	Fraud, Letters of credit
Counsel
Solicitors
Cases cited