Corporacion De Mercadeo Agricola v. Mellon Bank International

The New York Court of Appeals in Fair Pavilions, Inc. v. First National City Bank, 19 N.Y.2d 512, 518, 281 N.Y.S.2d 23, 27, 227 N.E.2d 839, 842 (1967), said that if a clause of a standby letter of credit were construed so as to “place one party at the mercy of another,” it “is against the general policy of the law.” I agree. That court also noted that when the bank had neither collateral nor a customer financially able to respond, it was “defending in its own interest.” Id. at 516, 281 N.Y.S.2d 23, 227 N.E.2d 839. This would put in issue the bank’s good faith in refusing to pay the…