Where a plaintiff brought suit to enforce a standby letter of credit (LoC), a judgment in favor of the plaintiff must be reversed because the plaintiff did not strictly comply with the LoC’s terms by presenting the original letter and a photocopy of its sole amendment.

“Here, we must determine whether, under G.L.c. 106, §5-108’s ‘strict compliance’ standard, an issuer of a letter of credit must pay the beneficiary where the letter of credit required presentment of ‘the original of and all amendments, if any, to this Letter of Credit,’ and the beneficiary presented the original letter of credit and a photocopy of its sole amendment. We conclude that payment is not required in such circumstances. We therefore reverse the allowance of summary judgment for the plaintiff beneficiary and direct entry of summary judgment in favor of the defendant bank. …

“The LoC contained the following term: ‘Credit shall be available with us by payment against presentation of … the original of and all amendments, if any, to this Letter of Credit for our endorsement.’ The LoC also stated that it was ‘subject to the Uniform Customs and Practices for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600 [(UCP 600)] and the laws of the Commonwealth of Massachusetts.’ …

“… Article 17(a) of UCP 600 states, ‘At least one original of each document stipulated in the credit must be presented.’ …

“The LoC is governed by Massachusetts law, the relevant portion of which requires that an issuer ‘observe standard practice of financial institutions that regularly issue letters of credit.’ G.L.c. 106, §5-108(e). ‘Standard practice’ derives from Article 17(a) of UCP 600, which requires presentment of an original of ‘each document stipulated in the credit.’ … The parties agreed that ‘the words “copy” or “copies” are not in the LoC or in Amendment No. 1.’ Thus, we analyze the propriety of the defendant’s dishonor through the lens of those cases in which the letter of credit called for an original, but none was presented. … We conclude, therefore, that the LoC required presentment of the original Amendment 1 and that ProQuip’s presentment of a copy of Amendment 1 did not strictly comply with the LoC’s terms.

“Our conclusion is bolstered by our review of the differing versions of Amendment 1 provided by the parties. … While the version offered by the bank included three handwritten signatures at the bottom of each page of the document, the photocopy presented by ProQuip included just one. Thus, the two versions differed from one another, further emphasizing why the original was required. It was beyond the scope of the bank’s ministerial role to determine that the variance between the copy presented and the original was ‘unimportant’ such that the presentment strictly complied with the requirement for originals.

“The case urged upon us by ProQuip, Ladenburg Thalmann & Co. v. Signature Bank, 128 A.D.3d 36 (N.Y. 2015), does not dictate a contrary result. In Ladenburg Thalmann & Co., the court held that the plaintiff’s failure to present an original amendment to the letter of credit did not justify the defendant’s dishonor. … In that case, however, the missing amendment had been superseded by later amendments and the beneficiary had presented those originals. … ‘Even under the strict compliance standard,’ the court concluded that ‘some variances may be allowable, if they do not “call upon the reviewing bank officer to exercise discretion on a commercial matter, [but] only to exercise discretion as a banker,” or if the errors “[do] not compel an inquiry into the underlying commercial transaction.”’ … Here, by contrast, the variance concerned the way Amendment 1, which embodied the current terms of the LoC, was presented. As the LoC required presentment of ‘the original of and all amendments, if any, to this Letter of Credit,’ and as standard practice, incorporated by the LoC, requires originals, we are persuaded that, in these circumstances, the variance was not minor and the defendant permissibly dishonored payment. Accordingly, we reverse the judgment in favor of ProQuip and remand the case for entry of judgment in favor of the defendant.”

ProQuip Limited v. Northmark Bank (Lawyers Weekly No. 11-085-23) (11 pages) (Hershfang, J.) The case was heard by Kristen R. Buxton, J., on motions for summary judgment. Thomas N. O’Connor for the defendant; Edward J. Denn for the plaintiff (Docket No. 22-P-701) (Aug. 18, 2023).

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