International business transactions

(4) granting the preliminary injunction must not disserve the public interest

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OUTLINE International Business Transactions

(4) granting the preliminary injunction must not disserve the public interest.

Under the doctrine of fraud in the transaction, a court may enjoin payment on a L/C, despite the independence principle, where there is shown to be fraud by the beneficiary of the L/C

Unfortunately, one unsettled point in the law is what constituted fraud in the transaction, i.e. what degree of defective performance by the beneficiary justifies enjoining a L/C transaction in violation of the independence principle

Fraud exception is flexible and it may be invoked on behalf of a customer seeking to prevent a beneficiary from fraudulently utilizing a standby

In order to collect upon the standby, Iran Radio was required to declare that Harris had failed to comply with the terms and conditions of the contract

Its attempt to do so necessarily involved its representation that Harris had defaulted under the contract, yet the contract explicitly provided that it could be terminated due to force majeure
- Court held this was enough of a showing of fraudulent attempt

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