Suppose That an Issuing Bank Pays on Documents That Are

question 62

Multiple Choice

Suppose that an issuing bank pays on documents that are conforming to the requirements of the letter of credit,but the seller has shipped worthless goods to the buyer.Which of the following statements,if any,are true?

• A) As long as the documents strictly comply with the letter of credit requirements, the bank will not have to reimburse the buyer.
• B) If there is fraud in the transaction, the bank will have to reimburse the buyer and seek its remedies against the seller.
• C) The strict compliance principle insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract.
• D) As long as the documents strictly comply with the letter of credit requirements, the bank will not have to reimburse the buyer and the strict compliance principle insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract.

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Definitions:

REM Sleep

Rapid Eye Movement sleep, a phase characterized by vivid dreams and increased brain activity.

Memory Consolidation

The process by which initial fragile short-term memories are transformed into stable, long-term memories.

Sleep Stages

The division of sleep into different phases or stages, including REM (rapid eye movement) and several stages of non-REM sleep, each characterized by specific brain waves and physiological states.

REM Sleep

A phase of sleep characterized by rapid eye movements, increased brain activity, and vivid dreams, playing a crucial role in emotional and mental health.