The strict compliance rule says that the bank's payment obligation to the beneficiary is primary, direct and completely independent of any claims that may arise in the underlying sale of goods transaction.

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The strict compliance rule in letters of credit actually states that the bank will only honor payment if the documents presented by the beneficiary strictly comply with the terms and conditions of the letter of credit. It does not address the independence of the bank's obligation from the underlying sale of goods transaction; that concept is referred to as the autonomy principle.

The Strict Compliance Rule Says That the Bank's Payment Obligation