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Lloyd's Shipping & Trade Law

A second exception to the autonomy of the letter of credit?

In letters of credit transactions a bank issuing or confirming an irrevocable letter of credit has a strict duty to pay against documents which on their face comply with the terms of the credit. This is so even where the bank is aware of problems existing in the underlying sale contract. The only exception to the rule is where the bank is aware that the beneficiary is party to a fraud on the documents.

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