Drawing on a standby letter of credit when no violation of the underlying contract has occurred.
Acceptance constitutes an unconditional obligation on the part of the accepting party to pay the draft at maturity. A draft accepted by a bank is called a “banker’s acceptance” whereas one accepted by a company is called a “trade acceptance.”
Party for whom a letter of credit is opened. “Account party” and “applicant” are the same, but sometimes one party will agree with the issuing bank to make all payments under a letter of credit showing the name of another party (as in the case of affiliated companies). Banks may refer to one of these parties as the applicant and the other as the account party. Continue reading