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24 Ariz. L. Rev. 319 (1982)
Emerging Law of Standby Letters of Credit and Bank Guarantees, The

handle is hein.journals/arz24 and id is 327 raw text is: THE EMERGING LAW OF STANDBY LETTERS OF
Boris Kozolchyk*
If there is an underlying theme to this much overdue Symposium on
the emerging law of letters of credit, it is Henry Harfield's (Rudyard
Kipling's Captain Courageous') Things should ha' bin kep' sep'rate.
The real problem is how to do it, particularly since, as Bernard Wheble
points out, in order to jug the hare you must first catch it. The problem
with catching this particular hare is that it is too many things to too many
people. Consider the following randomly selected quotes from judicial
and non-judicial authorities, including Symposium participants:
In recent years, another distinct use of the letter of credit has
emerged, accomplishing results previously obtained by the use of such de-
vices as performance bonds, escrow agreements and various forms of guar-
anty arrangements. . . . The use of the letter of credit in this capacity is
referred to as a guaranty or standby letter of credit.'
Nor is a letter of credit a contract of guaranty or suretyship. A guar-
antor or surety is often liable after the beneficiary has unsuccessfully
sought payment from the issuer's customer, that is, a buyer of goods.
Under a letter of credit, however, the issuer becomes bound in the first
instance to pay the beneficiary, and the beneficiary may look immediately
to the issuer for payment of drafts presented. Again, the beneficiary is not
subject to the various technical and nontechnical defenses that a guarantor
© Copyright 1982 by Boris Kozolchyk
* Professor of Law, University of Arizona College of Law; DCL University of Havana,
1956; LLB University of Miami, 1959; LLM University of Michigan, 1960; SJD University of
Michigan, 1966.
The author wishes to acknowledge his appreciation to Lisa Weseman for her research assist-
ance, Billie Kozolchyk for her editorial help, and Ellen Sewell for her copywork assistance, and to
Janis Penton, Harvey Gilbert, and Michael Wachtel of the Los Angeles firm of Rosen, Wachtell
& Gilbert for their suggestions. Equally helpful suggestions were made by Dennis Rosen and
Gayle Reay of the Tucson firm of Dennis Rosen, Ltd., by Professor Dale B. Furnish of the Ari-
zona State University College of Law and by Michael A. Goldberg of the Staff of the Federal
Reserve System. The author remains responsible, however, for any mistakes.
1. Pastor v. National Republic Bank, 56 Ill. App. 3d 421, 428-29, 390 N.E.2d 894, 897

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