LETTERS OF CREDIT 21 ence to the forms as set forth in the note will show that they con- tain (a) a statement that a "confirmed" credit has been opened in favor of the addressee for the account of the holder, which as we have seen courts have construed as a representation to the addressee that funds of the holder of the letter had been received and were held to the use of the addressee; {b) a statement of the conditions of the credit, or in other words, of the terms on which the funds were received and are held to the use of the addressee; (c) an authority to draw drafts on the issuer to the amoimt and under the conditions set forth; and {d) often an express promise to honor such drafts. This type of letter might be treated on the offer theory and could be upheld in that way. But it is perfectly obvious that those who draw and act on letters framed in such terms have in view something much more assured, permanent, conclusive and irrevocable than an offer. Letters of the second type are evidently drawn under the advice of counsel impressed with the offer theory of the cases we have discussed. Such letters are drawn in the form of offers, which are to become contracts upon acceptance by performing the terms set forth in the letter .^^ Here there is no direct suggestion that funds date and number of letter] and must be addressed to [issuer] and the amoxmt of the draft must be noted on the back hereof by the negotiating bank or bankers. We hereby agree with the bond fide holders that all drafts issued by virtue of this credit and in accordance with the above stipulated terms, shaU meet with due honor upon presentation at the office of the [issuer] if drawn and negotiated by [expiration date]. [Signature of issuer] The following form, faUing within the same type, suggests both money received and held to the use of the addressee and also notification of a contract betw^een holder and issuer for the benefit of addressee : [Addressee] [Date] We received today from [foreign correspondent bank] a message as follows: "Account [name of holder] open following confirmed credit [amoimt of credit] favor [name of addressee] against [terms and purposes of credit]." Of which kindly take notice. The credit will remain in force for [period of credit] and the same is hereby con- firmed for the account of [foreign correspondent Bank]. [No. of Letter] [Signature of Issuer]
- An example of this tjqje is:
Irrevocable Export Credit No. [Expiration date] [Addressee] : You are hereby authorized to draw upon us for account of [holder] at sight to the extent of [amount of credit] covering [purposes and terms of the credit]. Payment to
