The parties had been operating under the agreements for 11 years or longer. Eastern and the court managed to avoid the argument, but no one seemed to notice that the warranty section gave Eastern a slam dunk. The evergreen clause may be needed in a standby securing a surety. The standby is a wonderfully flexible device, but sometimes it needs a little fine tuning. Documentary conditions are always a matter of concern to the parties.
Some standby credits are clean.
They call for a draft or demand but nothing else. Others have sophisticated documentary requirements. The applicant, the issuer, and the beneficiary usually hammer out these conditions. Often, it seems, they neglect to hammer out the terms of the expiry. Most standby credits issued by banks expire after one year.