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The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann
The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann
Faculty Scholarship
Common justifications for the use of the letter of credit fail to explain its widespread use. The classic explanation claims that the letter of credit provides an effective assurance of payment from a financially responsible third party. In that story, the seller – a Taiwanese clothing manufacturer, for example – fears that the overseas buyer – Wal-Mart – will refuse to pay once the goods have been shipped. Cross-border transactions magnify the concern, because the difficulties of litigating in a distant forum will hinder the manufacturer's efforts to force the distant buyer to pay. The manufacturer-seller solves that problem by …
Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's The Role Of Letters Of Credit In Payment Transactions, Avery W. Katz
Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's The Role Of Letters Of Credit In Payment Transactions, Avery W. Katz
Faculty Scholarship
Ronald Mann's study of documentary defects in the presentation of commercial letters of credit1 is a valuable contribution to the commercial law literature in at least three respects. First, it offers a detailed and thorough empirical survey of an important though specialized aspect of commercial practice. Mann collected and coded a data sample of 500 randomly selected letter-of-credit transactions, personally evaluating each transaction to determine whether the documentary presentation by the beneficiary of the letter of credit (i.e., the seller) complied with the letter's formal terms. Then, for each case in which he found one or more documentary defects, Mann …