Commercial Law, 2012 Bar — Question 4

MULTIPLE CHOICE

AAA Carmakers opened an irrevocable Letter of Credit with BBB Banking Corporation with CCC Cars Corporation as beneficiary. The, irrevocable Letter of Credit was opened to pay for the importation of ten (10) units of Mercedes Benz S class. Upon arrival of the cars, AAA Carmakers found out that the cars were all not in running condition and some parts were missing. As a consequence, AAA Carmakers instructed BBB Banking Corporation not to allow drawdown on the Letter of Credit. Is this legally possible? A) No, because under the "Independence Principle", conditions for the drawdown on the Letters of Credit are based only on documents, like shipping documents, and not with the condition of the goods subject of the importation. B) Yes, because the acceptance by the importer of the goods subject of importation is material for the drawdown of the Letter of Credit. C) Yes, because under the “Independence Principle", the seller or the beneficiary is always assured of prompt payment if there is no breach in the contract between the seller and the buyer. D) No, because what was opened was an irrevocable letter of credit and not a confirmed letter of credit.

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