Letters of Credit - Module 6 of 6
An applicant for a letter of credit is also called a(n)
An applicant obtains a documentary commercial letter of credit from its bank and the bank in turn will pay certain proceeds to a beneficiary upon
A housing association wishes to ensure that a construction company will adequately perform repairs to its tenant homes after a hurricane. The association could guarantee performance of the construction work in compliance with prevailing trade standards by using
Leonard needs some quick cash and decides to sell his collection of old concert t-shirts. No one will buy the worthless shirts. He gets Ronald to falsely claim to Dwight that the collection is very valuable and Dwight, believing Ronald, buys Leonard’s t-shirt collection. Leonard’s inability to get quick cash for his t-shirts is an example of __________ risk and Dwight and Leonard’s deception of the t-shit collection’s value is an example of __________ risk in the transaction.
A letter of credit may be modified before presentment by consent of
Which of the following is NOT a valid source for interpreting a letter of credit?
Assume a letter of credit refers to delivery of “sweet crude oil” and an accompanying invoice refers to “sour crude oil.” The difference between the two types of oil is in the respective sulfur content and is a substantial issue in the sale of oil. The issuer would be required to
Valley National Bank drafts and issues a letter of credit that allows its customer, Voltage Motors Company, to draw credit to pay its parts supplier. The letter allows for “3 draws, up to $200,000.” Voltage wants to make three draws of $200,000 for a total of $600,000 and Valley responds that it only issued $200,000 in maximum credit. If the parties proceed to court and the court construes the letter against the drafter then Valley is obligated to make credit available in the amount of
Miami Gardens Bank issues a letter of credit to its customer, Dolphin Boat Manufacturing Company for, according to the letter of credit, thirty 20-foot wooden hulls to be used in its manufacture of commercial fishing boats. The invoice states that the delivery is for thirty 20-foot carbon fiber hulls, which is a substantially different type of hull. The documents are therefore nonconforming but Miami Gardens Bank pays the beneficiary anyway. The customer
Empire State Bank issues a letter of credit for its customer, Manhattan Shoes, to pay an Italian shoe manufacturer, Roma Shoe Company. The bank includes the condition that the amount of the letter of credit is payable upon the presentation of the transactional documents and only if the New York Giants win the next Super Bowl. The Giants fail to make the playoffs and therefore the Empire State Bank indicates it will not pay the Roma Shoe Company, despite an otherwise valid documentary presentation. Empire State Bank must