International Business 13th Edition by Donald Ball,Michael Geringer,Michael Minor ,Jeanne McNett

Exercise 10

The manager of the international department of the Cape Cod Five Bank learns on the way to work that the ship on which a local exporter shipped some goods to Spain (Wellfleet oysters in salt-water tanks) has sunk in high seas. She has received all the documents required in the letter of credit and is ready to pay the exporter for the shipment. In view of the news about the ship, the manager now knows that the Spanish customer will never receive the goods. Should the manager pay the exporter, or should she withhold payment and notify the overseas customer?