## Facts

- Uniloy Milacron Inc. (Uniloy) contracted to manufacture two blow-molding/bottling machines for MAB, LLC (MAB) for a total price of more than $1.3 million.
- The deal required MAB to provide a standby letter of credit in Uniloy’s favor for $388,000 of the purchase price.
- PNC Bank, N.A. and related entities (PNC) issued the standby letter of credit on MAB’s behalf, expiring July 31, 2006.
- The letter of credit required Uniloy to present, as conditions to draw:
  - a dated and signed certification stating Uniloy had not received payment from MAB within 60 days after shipment of two specified machines identified by model number UR8X7-7PNE CBTR and serial numbers N01A010088 and N01A0100089;
  - unpaid invoices for the machines; and
  - bills of lading showing the shipping date.
- Uniloy shipped the machines to MAB on May 3, 2006, and MAB did not pay the remaining $388,000.
- On July 31, 2006 (the expiration date), PNC received Uniloy’s draw request package, accompanied by a cover letter dated July 28, 2006.
- Uniloy’s presentation included:
  - a signed certification of nonpayment that was not dated;
  - unpaid invoices, with one serial number typed as N01A0100088; and
  - bills of lading listing serial numbers N01A0100088 and N01A0100089 and describing the machines as “Uniloy R2000 B.M.M.”
- PNC refused to honor, citing discrepancies between the presented documents and the letter of credit’s stated requirements (including the missing date on the certification and the serial-number/model-description differences).
- Uniloy sued MAB and PNC, seeking a declaratory judgment that PNC was obligated to honor the letter of credit.
- The parties filed cross-motions for summary judgment on the declaratory-judgment claim.
- After the summary-judgment ruling, PNC moved for reconsideration, asserting the credit incorporated ISP98 (ICC Publication No. 590) rather than UCP 500; Uniloy agreed ISP98 governed but argued the result stayed the same.

## Issues

1. Whether Uniloy’s presentation strictly complied with the standby letter of credit despite an undated certification and minor serial-number/model-description variations, such that PNC wrongfully dishonored the draw.
2. Whether applying ISP98 (rather than UCP 500) changed the strict-compliance analysis or outcome on PNC’s motion for reconsideration.

## Decision

- The court granted partial summary judgment to Uniloy on the declaratory-judgment claim, holding PNC was obligated to honor the letter of credit and could not reject the draw based on the cited discrepancies.
- On reconsideration, the court held ISP98 governed the standby credit but denied PNC’s motion because applying ISP98 did not change the conclusion that Uniloy’s presentation satisfied strict compliance.

## Legal Principles

- A letter of credit creates an issuer’s obligation that is independent from disputes over the underlying sales contract; payment turns on document compliance, not performance disputes.
- The issuer’s duty is determined by examining the presented documents on their face and within the time limits set by the credit.
- Under the strict-compliance standard, an issuer may dishonor when document differences would leave a reasonable document examiner uncertain whether the beneficiary met the credit’s stated conditions.
- Strict compliance is not a rule of automatic forfeiture for trivial errors; minor typographical mistakes or non-substantive variations do not justify dishonor when the presentation, read as a set, clearly identifies the transaction and confirms the required conditions.
- Where a credit requires a dated certification, the presentation may still comply if the date needed for examination is clear from the presentation materials and the issuer cannot reasonably claim it was at risk of paying before the credit’s timing condition (such as a “60 days after shipment” trigger) was met.
- Under ISP98, the issuer evaluates whether a presentation is compliant using standard standby letter-of-credit practice, focusing on whether the documents permit a clear determination of compliance rather than technical objections that do not create real uncertainty.

## Conclusion

Uniloy timely presented a draw request on a $388,000 standby letter of credit after MAB failed to pay, but PNC dishonored based on an undated nonpayment certification and minor serial-number and model-description differences across the presentation. The court held the documents, considered together, left no reasonable doubt that the draw was made more than 60 days after shipment and related to the two machines named in the credit, so the discrepancies did not justify dishonor under strict compliance. The court entered declaratory relief requiring PNC to honor the credit and later denied reconsideration, holding that ISP98 governed but did not alter the result.


Uniloy Milacron Inc. v. PNC Bank, N.A., 2008 U.S. Dist. LEXIS 33063 (2008)