Autonomy of the Letter of Credit

A fundamental principle of a Letter of Credit (the other being Strict Compliance) according to which the Letter of Credit is separate from and independent to the underlying transaction giving rise to it. Absent fraud of the Beneficiary or illegality in paying under the Letter of Credit, the bank cannot otherwise refuse to make payment under the Letter of Credit against presentation of documents complying with the terms of the Letter of Credit. This gives rise to the closely connected principle that a Letter of Credit is a transaction in documents and documents alone.

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