Article

Note: To finance construction of an "Offshore oil field service vessel", Kenny G. Bosarge (Claimant) approached Compass Bank for an unsecured loan of US$200,000. After applying, he was informed by Chris Garmon, Bank's personal banking officer (Officer) that the loan had been approved. To prove that the loan had been approved in seeking contracts and further financing, Claimant requested a written assurance from Officer who wrote and delivered to Claimant the following letter:

"Kenny Bosarge D/B/A Bosarge Offshore LLC Reference #:

"To Whom It May Concern:

"This letter of credit in the amount of $ 200,000.00 (Two Hundred Thousand Dollars and no/100) is available to the above stated customer. Funds are available at customer's request in any increment needed. If any other information is needed, please feel free to contact our office.

"Thanks,

"/s/ Chris Garmon

"Chris Garmon, Personal Business Banking Officer"

Claimant then solicited work and long term construction financing. Two weeks later, Bank informed him that the approval was rescinded.

When Claimant demanded an advance, Bank set forth additional conditions which Claimant did not attempt to meet. When the circumstances for proceeding with the project dried up, Claimant sued Bank. The Mobile Circuit Court granted judgment as a matter on law in favor of Compass Bank. On appeal, the Supreme Court of Alabama, in an opinion by Harwood, J., See, Woodall, Stuart, and Bolin, JJ., concurring, affirmed.

Comment: This undertaking aptly illustrates the need for the term "definite" in the definition of "letter of credit' and its important meaning. Surprisingly, the court did not refer to Revised UCC §5-102(a)(10) in reading its discussion. A case such as this one illustrates the gravity of the error of the drafters of UCP600 in equating "definite" with "irrevocable", an interpretation that is not justified under past revisions of the UCP.

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