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Commercial Law Summer Reviewer
Page 3 of 124directly liable to pay the seller-beneficiary;3.
- which undertakes to encashthe drafts drawn by the exporter/seller4. Instead of going to the place of the issuingbank to claim payment, the buyer mayapproach another bank, termed thenegotiating bank to have the draft discounted(Charles Lee v. CA, GR No. 117913February 1, 2002)
LIABILITIES OF PARTIES
1. Drawer liable to person on whom it wasissued provided identity proven, for theamount paid within fixed maximum.2. Bearer has no right of action if not paid byperson who issued it.3. Drawer may annul the letter of credit,informing the bearer and to whom it isaddressed.4. Bearer shall pay the amount received todrawer, otherwise action for execution maybe filed with interest and current exchange inplace where payment made on place whererepaid.5. If a bearer does not make use of letter ofcredit within agreed period, or if none, within6 months from date if in the Philippines, and12 months if outside the Philippines, it shallbe void. (Articles 569-572, Code ofCommerce)
– in a letter of credittransaction means that a bank, in determiningcompliance with the terms of a letter of credit isrequired to examine only the shipping documentspresented by the seller and is precluded fromdetermining whether or not the main contract isactually accomplished or not.
RULE OF STRICT COMPLIANCE
– in a letter ofcredit transaction means that the documentstendered by the seller or beneficiary must strictlyconform to the terms of the letters of credit, i.e., theymust include all documents required by the letter ofcredit. Thus, a correspondent bank which departsfrom what has been stipulated under the letter ofcredit, as when it accepts a faulty tender, acts on itsown risk and may not thereafter be able to recoverfrom the buyer or the issuing bank, as the case maybe, the money thus paid to the beneficiary (FeatiBank vs. CA, G.R. No. 94209, April 30, 1991)
COMMON TYPES OF LETTERS OF CREDIT
BULK SALES LAW
PURPOSE OF THE LAW
1. To prevent the defrauding of creditors by thesecret sale or disposal or mortgage in bulk ofall or substantially all of a merchant’s stock ofgoods.2. To prevent secret or fraudulent sale ormortgage of goods in bulk until the creditor ofthe seller shall have been paid in full.
: The law covers all transactions,
whether done in good faith or not, or whether theseller is in a state of insolvency or not
, as long asthe transaction falls within the description of what is a“bulk sale.”
TRANSACTIONS CONSIDERED AS “BULK SALE”
– sale, transfer, mortgage or assignment of1. a stock of goods, wares, merchandise,provisions, or materials otherwise than in theordinary course of trade2. all, or substantially all, of the business of thevendor, mortgagor, transferor, or assignor3. all, or substantially all, of the fixtures andequipment used in the business of thevendor, mortgagor, transferor, or assignor.
1. When accompanied with a written waiver byall the seller/mortgagor’s creditors2. The law does not apply to executors,administrators, receivers, assignees ininsolvency, or public officers, acting underlegal process3. Sale or mortgage is made in the ordinarycourse of business4. Sale by assignee in insolvency or thosebeyond the right of creditors5. Sale of properties exempt from attachment orexecution
VENDOR BUYER, ASSIGNEE,MORTGAGEE,TRANSFEROR
Has obligations andliabilities under the BulkSales Law.No direct liability nor anyobligation under the BulkSales Law