HRS §490:2-325
What a letter of credit means in a sales contract
This section explains what happens when a buyer and seller agree to use a letter of credit. If the buyer does not provide it on time, that is a breach. A proper letter of credit pauses the buyer's payment duty, but if the bank refuses to pay, the seller can ask the buyer to pay directly.
buyers
The statute, as written — "Letter of credit" term; "confirmed credit"
(1) Failure of the buyer seasonably to furnish an agreed letter of credit is a breach of the contract for sale. (2) The delivery to seller of a proper letter of credit suspends the buyer's obligation to pay. If the letter of credit is dishonored, the seller may on seasonable notification to the buyer require payment directly from him. (3) Unless otherwise agreed the term "letter of credit" or "banker's credit" in a contract for sale means an irrevocable credit issued by a financing agency of good repute and, where the shipment is overseas, of good international repute. The term "confirmed credit" means that the credit must also carry the direct obligation of such an agency which does business in the seller's financial market.
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