In a letter-of-credit transaction, Unum Inc., a U.S. firm, delivers a bill of lading to Verity Bank to prove that a contracted-for shipment was made to Wallaby Ltd., an Australian company. Verity must pay Unum
A)before policing the underlying contract.
B)after verifying the facts that the bill of lading purports to reflect.
C)against the bill of lading, without more.
D)coincident with the buyer's assurance of its receipt of the goods.

Question

Quizplus · Accepted Answer

In a letter-of-credit transaction, the bank (Verity Bank) must pay against the bill of lading as presented by the seller (Unum Inc.) without requiring additional verification or conditions such as policing the underlying contract, verifying the facts, or waiting for the buyer's assurance of receipt. The bill of lading serves as the key document that triggers payment because it is proof that the seller has fulfilled their part of the contract by shipping the goods.

In a Letter-Of-Credit Transaction, Unum Inc