Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company,a U.S.firm,to facilitate an international sales contract to buy resources from Global Mining,Ltd.,a British company.
-Refer to Fact Pattern 22-B1.Economy Bank is bound to
A)make sure that the parties perform the contract.
B)verify with Finish & Refining that the transaction has been completed.
C)make payment when Global Mining presents the proper documents.
D)pay Global Mining whenever it asks to be paid.

Question

Quizplus · Accepted Answer

As the issuer of the letter of credit, Economy Bank is bound to make payment to Global Mining when it presents the proper documents in accordance with the terms of the letter of credit. It does not have a duty to make sure that the parties perform the contract, nor does it have to verify with Finish & Refining that the transaction has been completed. It also cannot simply pay Global Mining whenever it asks to be paid, as payment must be made in accordance with the terms of the letter of credit.

Fact Pattern 22-B1 (Questions B18-B20 Apply)