LaBarge Pipe & Steel Company agreed to sell PVF $143,613.40 of 30-inch pipe provided that PVF obtain a letter of credit for $144,000, with the letter of credit entitling LaBarge to payment if PVF did not pay for the pipe within 30 days of invoice. PVF obtained the letter of credit from First Bank but received only a facsimile copy of it. The letter of credit required LaBarge to submit the original of the letter of credit for a demand of payment.
PVF did not pay within 30 days and LaBarge submitted a facsimile copy of the letter of credit and requested payment. First Bank denied the request for payment and LaBarge filed suit against First Bank for failure to pay. LaBarge argued that it was not disputed that PVF had not paid on the contract and First Bank was required to pay on the letter of credit. How would you explain First Bank’s rights to LaBarge? [LaBarge Pipe & Steel Co. v. First Bank, 550 F.3d 442 (5th Cir.)]