Fact Pattern 22-1
First State Bank issues a letter of credit in favor of Oboe Company, an American firm, to facilitate an international sales contract to buy resources from Lapland Mining, Ltd., a Finnish company.
-Refer to Fact Pattern 22-1.To obtain payment,Lapland must comply with all of the requirements of the letter of credit

Question

Quizplus · Accepted Answer

The use of a letter of credit means that First State Bank is acting as a guarantor of payment to Lapland, and therefore Lapland must strictly comply with all of the requirements outlined in the letter of credit in order to receive payment. Any deviation or non-compliance with the requirements could result in non-payment.

Fact Pattern 22-1 First State Bank Issues a Letter of Credit in Favor