Artice 5 - Letters of Credit (UCC)

Question 1

Letter of Credit

Answer 1

Means that a seller uses to provide themselves with the assurane that they will be paid for delivering goods

Question 2

Applicant

Answer 2

The person at whose request or on whose account the letter of credit is issued

Question 3

Beneficiary

Answer 3

The person under the loc terms who is entitled to have the letter honored upon presentation

Question 4

Issuer

Answer 4

A bank or person that issues a leter of credit

Question 5

Correspondent bank

Answer 5

A bank that is designated to handle the payment under an authorized letter of credit

Question 6

Nominated person

Answer 6

A person or bank whom the issuer designated or authorizes to pay, negotiate, or give value under a letter of credit

Question 7

Presentation

Answer 7

Delivery of a decument to an issuer or nominated person to honor or give value under a letter of credit

Question 8

Record

Answer 8

Letters of credit require this; As under Article 2, this is defined as a tangible, electronic, or other medium that is retrievable in persceivable form

Question 9

Creation of a LOC

Answer 9

• No consideration necessary
• Can be in any form that is a record and authenticated by a signature or in accordance
• Can be revocable
• Unless stated otherwise, expire in one year after stated date of issuance
• One year statute of limitations in bringing suit

Question 10

Duties, Rights, and Obligations

Answer 10

• Issuer MUST honor a presentation that complies
• If corresepondent bank dishonors wrongfully, issuer is liable
• If presentation is honored, beneficiary warrants to the issuer no fraud, no forgery, no violation of agreement
• Generally, may not be transferred unless stated
• Independent of the underlying contract between the seller and the buyer