## Facts

- Sellers contracted to sell real property to Jacklyn Construction Corp., which owed a nonrefundable payment under the contract.
- To secure that obligation, the issuing bank provided a clean, irrevocable standby letter of credit naming the sellers’ attorney as beneficiary.
- The letter of credit required presentment of (1) a sight draft referencing a specified credit number and (2) the beneficiary-attorney’s sworn certification that the buyer “willfully failed to close title” under the contract.
- After the buyer failed to close, the beneficiary presented a sight draft that did not reference the required credit number.
- The beneficiary also presented an affidavit that referenced the credit number and demanded payment but did not certify that the buyer “willfully failed” to close title as required.
- The issuing bank dishonored the demand for failure to comply with the letter of credit’s documentary conditions.
- The trial court granted summary judgment to the plaintiffs, finding compliance and ordering payment; the bank appealed.

## Issues

1. Whether the issuer of a standby letter of credit may dishonor when the beneficiary’s documents do not strictly conform to the letter of credit’s stated requirements.
2. Whether placing required information in an accompanying affidavit can cure a sight draft’s failure to include a required credit-number reference.
3. Whether omission of a required certification regarding the applicant’s “willful” failure to close title is a material nonconformity permitting dishonor.

## Decision

- The appellate court reversed the trial court’s order granting summary judgment to the plaintiffs.
- The court held the bank properly dishonored because the beneficiary failed to strictly comply with the letter of credit’s documentary requirements.
- The court rejected any substantial-compliance approach where the required statements were missing from the specified documents.

## Legal Principles

- Letters of credit are independent documentary obligations; the issuer’s duty to honor depends on facial compliance of the presented documents with the credit’s terms, not the underlying transaction.
- New York applies a strict-compliance standard to letter-of-credit presentment; substantial compliance does not require honor.
- An issuer is entitled to insist on the precise documents and certifications specified and lacks discretion to waive stated documentary conditions when evaluating presentment.

## Conclusion

The appellate court held that the issuer properly dishonored because the beneficiary’s sight draft and supporting affidavit did not strictly conform to the letter of credit’s explicit requirements, including the draft’s required credit-number reference and the sworn certification of the buyer’s willful failure to close title.


Wood v. State Bank of Long Island, 203 A.D.2d 278, 609 N.Y.S.2d 665 (N.Y. App. Div. 2d Dep’t 1994)