— The fate of an unconditional bank guarantee or a letter of credit being independent contracts is not dependent upon any dispute between the contracting parties and that payment thereunder has to be made if an unconditional undertaking has been made by the issuer — The payment obligation under both the instruments is dependent on documentary demands and the issuer is barred from making any determination of objective facts — This is called the autonomy principle — The premise on which this principle rests is that as between parties to documentary credit transactions a dispute related to the underlying transaction has to be pursued through a separate action for breach of the underlying contract and not by withholding payment under the letter of credit — “Pay first, sue later” is the core objective underlying the autonomy principle. [PLR 2024 Lahore 1 = PLD 2024 Lahore 1 = 2023 LHC 4474]

— The fundamental rule of payment under the bank guarantee independent of any dispute between the contracting parties is excepted only where fraud is alleged as against the beneficiary of the bond/guarantee and the bank has notice of such fraud. [PLR 2024 Lahore 1 = PLD 2024 Lahore 1 = 2023 LHC 4474]