DCW maintains a list of recently-decided court cases involving commercial letters of credit, standby LCs, demand guarantees, and other trade
This month, we sort through some of the big questions shaping LC practice today. Is it time to rewrite UCP
Following his writing in the past two editions of DCW, Robert Parson examines legal developments on sanctions and sanctions clauses that have arisen in courts recently and implications for LC practice.
Beneficiary Bayport Polymers appealed temporary injunction restraining presentation of LC documents.
To support its engineering and construction work on a high-density polyethylene plant in Bayport, Texas, CB&I, LLC (Contractor/Applicant) applied for and caused an unspecified issuing bank to issue a standby letter of credit in favor of Bayport Polymers, LLC (Beneficiary). A key metric in Contractor/Applicant’s progress was “RFHI Completion” whereby Beneficiary would be able to introduce hydrocarbons into the plant. This completion date was originally expected for about one-thousand days after the effective contract date of October 8, 2021. Each week past planned completion would result in liquidated damages owed by Contractor/Applicant (capped at 6% of contract value). Beneficiary could pursue such damages in three ways: (1) invoice Contractor/Applicant for damages with a 30-day due date; (2) withhold amounts already due and payable to Contractor/Applicant; or (3) “collect on either letter of credit”.
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