QUESTION 10 - Financing

Importers Ltd in State P entered a contract to buy "10 new passenger cars" from Overseas Exporters Ltd in State R. Importers Ltd secured an irrevocable Letter of Credit from Home City Bank in State P that named Overseas Exporters Ltd as the beneficiary. The Letter of Credit required Overseas Exporters Ltd to produce a clean "on board bill of lading" for "10 new passenger cars" for Overseas Exporters Ltd to collect payment on the credit. When Overseas Exporters Ltd placed the cars aboard a carrier for shipment, it received the required Bill of Lading and other required documents. Importers Ltd then heard from a competitor of Overseas Exporters Ltd that Overseas Exporters Ltd had placed "near new" (but not brand new) cars on the carrier. After hearing of this accusation, for which it does not have any proof, Importers Ltd promptly notified Home City Bank of this and asked the bank not to pay Overseas Exporters Ltd on the Letter of Credit. The bank has refused to comply with the request. Importers Ltd has now brought legal action to stop Home City Bank from making payment.

(a) Should a Court in State P grant Importers Ltd request to stop its bank from making payment on the Letter of Credit?

(b) What if the Bill of Lading stated that the cars were not new but 'near new', would the bank be required to pay on this change of facts?