Letters of Credit Flashcards
A seller and buyer enter into an international contract for the sale of goods involving a large amount of money. They agree to finance the sale by a letter of credit. Which of the following is correct?
A. Consideration will be required by the buyer for the issuance of the letter of credit.
B. A letter of credit can only be issued on a tangible form because a signature is required.
C. Domestic letters of credit are revocable, but, unless agreed, international letters of credit are irrevocable.
D. Letters of credit must have an expiration date and cannot be stated to be “perpetual.”
C. Domestic letters of credit are revocable, but, unless agreed, international letters of credit are irrevocable.
Domestic letters of credit are revocable and international letters of credit are irrevocable unless otherwise stated or agreed.
Wrong Answer
A letter of credit can be issued in any form that is a record and is authenticated by a signature. The record can be on a tangible, electronic, or other medium that is retrievable.
