when the bank has the right to cancel the credit before negotiations without prior notice to the beneficiary. This is no longer allowed by the Philippine banks with a resolution of the MB of BSP

when the opening bank notifies the beneficiary directly of through a notifying bank.

when the notifying bank upon instructions of the opening bank assumes the obligation to perform the undertaking stipulated in the letter of credit. The liability of the bank of the importer is also the liability of the bank of the exporter, hence, the exporter enjoys the protection of 2 banks.

when the bank waives its right to cancel of notify the credit prior to negotiations. Here, the exporter is accorded greater protection since the importer cannot cancel the order.

one in which the indorser specifies the person to whom or whose order the instrument is to be payable.

this means that the instrument is refused payment or refused acceptance

the party who is to receive the letter of credit.

used for long-term credit e.g. bonds, stock certificate.

bank of the seller instructed to pay the letter of credit .

it is simply indicated by the signature of the endorser at the back of the instrument or on some paper attached thereto.

the printing of one's name and signature at the back of the instrument without specifying the indorsee.

the buyer of merchandise who will initiate the letter of credit.

the transfer of the instrument from one party to another party

is one who accepts the instrument with the understanding that: • it is complete & regular on its face; • he became holder before its maturity; • he possesses no knowledge that the instrument has been dishonored; • he has no knowledge of any defect of the instrument; and • he accepted the instrument in good faith and for value received.

emphasizes its use as a medium of exchange e.g. gov't credit money, bank credit money.

implies the verbal promise of the debtor when he buys consumable goods of credit and this is otherwise known as charge account. The creditor enters the account in his notebook to show the existence of credit transaction

one that bears the signature of 2 persons - the maker and co- maker.

when the opening bank issues a letter addressed generally to persons or corporation indicating its intention to honor the drafts of the beneficiary under the terms specified therein.

it is one that limits the liability of the endorser. It is made by writing the words "without recourse".

an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed future time a certain sum of money to order or to bearer.

used to facilitate the use of credit in short-term commercial activities. e. g. checks, drafts, acceptances promissory notes, etc.

it is a special endorsement to which words are added that create a condition which must happen before the endorsee is entitled to payment.

an endorsement that prohibits the further negotiation of the instrument.

when the bank of the exporter does not assume any other obligation except that of notifying the beneficiary, in short, it acts only as the advising or paying agent for the issuing of bank.

one in which the collateral is described on its face . or one a separate document. The value of the collateral shall be over and above the loan granted.

those instrument that lacks the essentials of negotiability. e. g. open book account.

exhibiting of the instrument at the bank either for payment or for acceptance.

bank of the buyer that issues and undertakes the letter of credit for the account of the buyer. It will notify the beneficiary that the Jetter of credit has been opened.

a written promise on the part of the bank to honor drafts drawn against it or for its account by a specifi.ed beneficiary or his order under the specified beneficiary of his order under the specifications contained in the letter of credit. A letter issued by a bank at the request of a buyer authorizing the seller to draw drafts against the bank for a designated sum of money payable at a specific time.

one that bears only the name of the maker .