You are here: / / The “Strict Compliance” Rule Re: Documents Required for a Drawdown...
, ,

The “Strict Compliance” Rule Re: Documents Required for a Drawdown from a Letter of Credit Explained

The First Department, in a full-fledged opinion by Justice Saxe, determined that minor discrepancies in the documents required by a letter of credit as a prerequisite for a drawdown did not violate the “strict compliance” rule.  Here a true copy of a document, rather than the original, was submitted.  The true copy was deemed to satisfy the “strict compliance” rule:

…[A]pplying the standard of strict compliance, plaintiff’s drawdown request should have been honored because, under these circumstances, the production of a true copy of amendment 2, instead of an original, was sufficient even to satisfy the strict compliance standard.

Strict compliance has been said to require that “the papers, documents and shipping directions . . . be followed as stated in the letter [of credit],” that “[n]o substitution and no equivalent, through interpretation or logic, will serve,” and that “[t]here is no room for documents which are almost the same, or which will do just as well” … . Even slight discrepancies in compliance with the terms of a letter of credit have been held to justify refusal to pay … .

“The [strict compliance] rule finds justification in the bank’s role in the transaction being ministerial . . . and to require it to determine the substantiality of discrepancies would be inconsistent with its function” … . The “reason for the strict [compliance] rule is to protect the issuer from having to know the commercial impact of a discrepancy in the documents” … .

However, as this Court has recently observed, “According to the official UCC commentary, the strict compliance standard does not require that the documents presented by the beneficiary be exact in every detail” (BasicNet S.P.A v CFP Servs., Ltd., __ AD3d __, __, 2015 NY Slip Op 02080, [1st Dept 2015]) [summarized directly below]. The doctrine of strict compliance “does not mean slavish conformity to the terms of the letter of credit . . . [and] does not demand oppressive perfectionism” (id., quoting Official Comment 1, reprinted in McKinney’s Cons Laws of NY, Book 62½, UCC 5-108 at 367). Ladenburg Thalmann & Co, Inc. v Signature Bank, 2015 NY Slip Op 02224, 1st Dept 3-19-15

 

You might also like
RIGHT TO TESTIFY BEFORE A GRAND JURY IS NOT A RIGHT RESERVED TO A DEFENDANT, IT IS A STRATEGIC DECISION TO BE MADE BY COUNSEL.
ADMITTING INTO EVIDENCE A PISTOL ALLEGED TO BE THE SAME TYPE OF WEAPON USED IN THE CRIME WAS NOT ERROR (FIRST DEPT).
TRIAL JUDGE IMPROPERLY LIMITED DISCOVERY OF ROSARIO MATERIAL AND IMPROPERLY COMMUNICATED WITH THE JURY OFF THE RECORD AND OUTSIDE THE PRESENCE OF DEFENDANT AND COUNSEL.
THE 1ST DEPARTMENT, OVERRULING PRECEDENT AND JOINING THE OTHER DEPARTMENTS, DETERMINED INDIVIDUAL MUNICIPAL EMPLOYEES NEED NOT BE NAMED IN A NOTICE OF CLAIM (FIRST DEPT).
QUESTIONS OF FACT ABOUT THE CAUSE OF PLAINTIFF’S FALL AND DEFENDANT’S CONSTRUCTIVE NOTICE PRECLUDED THE AWARD OF SUMMARY JUDGMENT TO THE DEFENDANT IN THIS STAIRWAY SLIP AND FALL CASE (FIRST DEPT). ​
THE CONTENTS OF A SAFE DEPOSIT BOX CONSTITUTED THE PROPERTY OF JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP, THEREFORE THE CONTENTS ARE AVAILABLE TO SATISFY A JUDGMENT AGAINST ONLY ONE OF THE JOINT TENANTS (FIRST DEPT).
Testimony Which Could Have Added Relevant Evidence About the Nature of Plaintiff’s Work (Pre-Injury) and the Effects of the Injuries Should Not Have been Excluded as “Cumulative”
MOTHER WAS NOT ADVISED OF THE RIGHTS HER SON WAS GIVING UP BY ADMITTING TO THE OFFENSE IN THIS JUVENILE DELINQUENCY PROCEEDING, NEW FACT-FINDING ORDERED (FIRST DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Arbitrator Exceeded Her Powers to Modify an Award and Failed to Make a “Final... Criteria for Presentation of Exculpatory Evidence to the Grand Jury Explained...