Flyby Knight [FK] contracts to sell 12 helicopters to Air Nigeria, for US$ 8 million each. Payment is to be made by irrevocable letter of credit issued by the Bank of Nigeria and confirmed by Citibank in New York. The letter of credit is payable when the confirming bank receives: a. bill of lading indicating that all 12 helicopters are loaded on board a ship ready for sailing to Nigeria, b. a commercial invoice for US$ 96 million and c. a draft payable to FK for $96 million. FK loads the aircraft on board a ship ready for sailing to Nigeria and receives from the ship captain an on-board bill of lading. The next day, FK delivers the on-board bill of lading, a commercial invoice for US $96 million and a draft payable to FK for US$96 million to Citibank. Later the same day, Air Nigeria informs FK that its inspectors on board the ship have discovered serious mechanical problems with the rotator blades and fuel lines of the helicopters. Air Nigeria informs FK that it will neither accept nor pay for the helicopters.
Part 1
- FK is entitled to no money.
2. FK is entitled to no money, provided Air Nigeria can prove the helicopters are defective.
3. Air Nigeria is obligated to pay FK the full price.
4. Bank of Nigeria is obligated to pay FK the full price.
5. Citibank is obligated to pay FK the full price.
6. FK is entitled to only the reduced value of the helicopters, provided Air Nigeria can prove the helicopters are defective.
and
Part 2: Your Reason for answer chosen
