where a bank confirms to the addressee the issuance of a letter, commercial usage regards this as a "confirmed letter of credit," entitling those to whom it is confirmed, upon compliance with its conditions, to look to the confirming bank for payment, without recourse. The lay mind, not without judicial authority, seems to regard this as a sort of contract of guaranty.^ Great importance is attached to the use of the words "confirmed" and "irrevocable" in such letters even though what is said to be "confirmed" and "ir- revocable," and is so regarded in practice, may not in some cases be so at all in legal fact.' The conditions and provisions of these letters vary with the exi- gencies of each case, and no very definite or uniform rules of con- struction, either in practice or in our courts, seem yet to have been attained. This is due to the fact that before the present war our general foreign business was for the most part financed in other ways. When we suddenly became the world's great selling market, confronted with new and strange buyers, and new business and exchange difficulties, our exporters found it expedient in many cases to demand either cash with the order or confirmed New York credits; with the result that this letter of credit device, which for many years has worked well on occasion here and which was in famihar use abroad, came quickly into extensive use. Whether it will be much used after the war remains to be seen. The pro- vincial desire of the average American exporter to sell for cash or its equivalent with his order, the possible decline of the London discount market, changes in international trade and banking, conunerdal instability abroad, new and experimental markets and the like, may well tend to a more extensive use of these letters of credit and procure for them an established place in the law merchant. But in any event, their increased use during the last
- 2 " Commercial letters of credit are issued at thirty, sixty, ninety days', four or
six months' sight, sometimes at other usage. A bank which issues such a letter of credit virtually agrees with the party in whose favor it is issued, although not always in so many words, that his drafts, drawn under and in conformity with and within the amount of the credit, shall be duly honored on presentation, provided that he complies with the text of the credit. This is usually regarded as practically equiva- lent to a guaranty of payment to the holder." B. Olney Hough, Practical Ex- porting, 546.
- 3 See authorities cited post. Business houses seem to regard a letter "confirmed"
eo nomine as irrevocable before expiration date named therein, while a letter not so "confirmed" is revocable at will. See Beal, supra.
