SewChez International Ltd. v. CIT Group/Commercial Services, Inc.

MEMORANDUM **

SewChez’s claims against CIT for fraud and breach of contract are premised on the theory that CIT’s prior waivers of its right to demand strict compliance with the terms of the letters of credit formed an implied contract between SewChez and CIT. This theory fails because the letters of credit expressly provide that past waivers of discrepancies create no obligation to waive discrepancies in the future. See also Cal. Com.Code § 5108, comment 7 UCC (“Waiver of discrepancies by an issuer or an applicant in one or more presentations does not waive similar discrepancies in a future presentation.”). This principle applies to SewChez’s dispute with CIT because it is undisputed that CIT meets the definition of “applicant” under the California Commercial Code, see Cal. Com.Code § 5102(a)(2), and SewChez cannot claim that the terms of the contract between CIT and JPMorgan alter *724 CIT’s status as an applicant because Sew-Chez was not a party to the contract. Because there was no implied contract between SewChez and CIT, SewChez’s breach of contract claim fails.

Moreover, SewChez’s fraudulent concealment claim likewise fails. Because SewChez and CIT had no contractual…