The defendant bank issued an irrevocable letter of credit on behalf of its customer, Adastra Knitting Mills. It promised to honor sixty-day time drafts of Courtaulds for up to $135,000 covering shipments of "100% Acrylic Yarn." Courtaulds presented its draft together with a commercial invoice describing the merchandise as "Imported Acrylic Yarns." The packing lists that were stapled to the invoice contained the following description: "Cartons marked: 100% Acrylic." The bank refused to accept the draft because of the discrepancy between the letter of credit and the commercial invoice. (The buyer had gone into bankruptcy, and the court-appointed trustee would not waive the discrepancy.) The documents were returned and the plaintiff brought this action. The lower court held that the bank was liable to the plaintiff for the amount of the draft because the packing lists attached to each carton stated that the cartons contained "100% Acrylic," and the bank appealed.
1. Why did the bank refuse to accept the draft upon presentation of the documents?
2. Had the bank known that the yarns described in the invoice as "imported acrylic yarns" were actually 100% acrylic, as was called for in the letter of credit, would the outcome have been different?