A letter of credit would have to be very specific and as


Please answer the following question by identifying (1) The legal issue (2) Rules apllied (3) Application (4) Conclusion. The problem below will center the Letter-of-Credit Requirements X enters into agreement with Y whereby X was to deliver some goods to Y. The agreement mentions that Y would provide X with a letter of credit by way of compensation, the amount of which would be in conformity with the prevailing market rate for such goods. However, Y realizes a letter of credit would have to be very specific and as the compensation would depend upon the market rate the decides to make the payment in cash upon receiving the goods from X. When Y receives a communication from X to this effect, he decides to sue X for breach of contract. X argues that as the agreement was conditional on the mode of compensation, there was no obligation assumed by him if the letter is not provided. Is X's justification valid? Discuss.

 

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