Hi

I'm doing a business memo for my International Law class.

In the memo I have to answer the question below:

I'm an employee of Garcia Imports. My boss, Mr. Jerome, told me that if the shipment arrives late, Garcia will suffer a catastrophic financial loss. Jerome asked me for a memo to him answering:

* Will Garcia be to stop payment on the Letter of Credit?*

I already wrote the memo but I need someone to review and correct the memo to make sure that everything is included and that it make sense. I will also include the background that I had to use to write the memo. Please go over my memo and make corrections and if you have any advices I will appreciate it.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Here below is the memo I wrote: Please make corrections.

To: Mr. Jerome

From: Garcia Employee

Date: April 11, 2021

Subject: Letter of Credit Payment

In a CIF contract, a letter of credit is a promise from the bank that the two parties involved will make smooth transactions on time. For the agreement between Garcia Imports and Lesh Exporters the reason for obtaining a letter of credit from Hart National Bank(NY) is to guarantee that the bank is responsible for paying $300,000 under their funds before the expiration date. In this case, Garcia will not be able to stop the payment on the letter of credit because this is a payment method used in international trade to guarantee that the beneficiary in this case Lesh Exporter will be paid.

Once the bank receives the confirming documents, the bank must review the documents presented to prove that the beneficiary performed all the requirements in order for the bank to validate the letter of credit and honor by making the agreed payment even if something happens leading to a shipping delay.

The terms of the letter of credit stated that payment must be initiated by presenting a bill of lading showing shipment, "to arrive NY on or before June 1, 2021". This means that Lesh Exporter obtained the bill of lading as the beach chairs were loaded on the ship and this is the document presented for payment. As a result, the seller has fulfilled the terms of the letter of credit and the bank has an obligation to pay. Thus Garcia cannot stop the letter of credit since the seller has fulfilled the terms of the letter of credit by presenting a bill of lading to the issuing bank.

Under the letter of credit guidelines, even if Garcia will suffer major financial losses, payment cannot be canceled without the consent of the issuing bank and the beneficiary. Due to the fact it was not for the negligence of Lesh Exports to deliver the beach chairs order on time, it was cause that the seller couldn't control. However, only Lesh Exports, the beneficiary, can initiate the cancellation by a written declaration within the validity period of the letter of credit.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Here below is the information/background that I had to use to write the memo:

On January 3, 2021, Lesh Exporters, a manufacturer in India, made a contract to sell 200,000 beach chairs to Garcia Imports, a NY corporation, for "$300,000(US), CIF New York, shipment on or before March 20, 2021, to arrive on or before June 1, 2021." The contract required Garcia Imports to obtain a Letter of Credit "issued or confirmed by a reputable N.Y. commercial bank." Garcia intended to resell the beach chairs to customers in the northeastern United States in the beginning of summer 2021.

On January 20, 2021, Hart National Bank (NY) issued a Letter of Credit for the benefit of Lesh in the amount of $300,000(US), to expire on March 30, 2021. The Letter of Credit required presentment of a Bill of Lading showing a shipment "to arrive NY on or before June 1, 2021"

On March 17, 2021, Lesh delivered the $200,000 beach chairs to Weir Shipping Lines for shipment to NY on the container ship Ripple. The Bill of Lading, dated March 17, 2021, stated that the Ripple was "to arrive NY on / before May 15, 2021."

On March 23, 2021, while the Ripple was entering the Gulf of Aden (at the Southern tip of the Arabian Peninsula), a large container ship (the "Ever Given") became stuck in the Suez Canal. The Ever Given remained stuck in the Canal, resulting in a tremendous backlog of ships behind the Canal. The backup will certainly delay the Ripple from arriving in NY before June 30, at the earliest.

On March 28, 2021, 5 days after the Ever Given blocked the Canal, Lesh Exports presented the Bill of Lading and all the other documents required by the Letter of Credit to Hart Bank. Hart immediately notified its customer, Garcia Imports, that a conforming presentment was made.