Which of the following is true of the duties of an issuer of a letter of credit?

A. The issuer has a duty to verify that the papers are properly supported by facts.
B. The issuer has a duty to verify that the underlying transaction has been performed.
C. If the issuer dishonors a draft without justification, it is liable to its customer for breach of contract.
D. If the goods sold by the seller do not conform to the contract, the issuer may dishonor a draft.



Answer :

Final answer:

The duties of an issuer of a letter of credit involve verifying documentation accuracy and the conformity of goods to contract terms.


Explanation:

The duties of an issuer of a letter of credit include:

  • The issuer has a duty to verify that the papers are properly supported by facts.
  • If the goods sold by the seller do not conform to the contract, the issuer may dishonor a draft.
  • The issuer is not required to verify that the underlying transaction has been performed.
  • If the issuer unjustifiably dishonors a draft, it may be liable to its customer for breach of contract.

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