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Hambro Bank, Ltd., an English bank, had received a cable from a Danish company, A.O., requesting that an irrevocable letter of credit be opened in favor of J.H. Rayner and Company. A.O. instructed Hambro Bank that the letter of credit be for "about P16,975 (pounds) against invoice full straight clean bills of lading covering about 1,400 tons Coromandel groundnuts." The bill of lading presented to Hambro by J.H. Rayner stated "bags machine-shelled groundnut kernels," with the abbreviation C.R.S. in the margin. Hambro Bank refused to pay on the letter of credit. J.H. Rayner sued Hambro. The custom of trade holds that C.R.S. is short for Coromandel groundnuts. Why did Hambro Bank not want to pay on this letter of credit? Was the bank correct in denying payment on this letter of credit? What rule applies in this case?
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