Friday, April 29, 2011

Revocable / Irrevocable LC

LC, which can be cancelled or amended by the applicant at any time within the validity without prior consent of the beneficiary, is called Revocable LC, In normal course any amendment to or cancellation of letter of credit is done only with the consent of the parties of letter of credits i.e issuing bank, applicant and beneficiary. However under a revocable Letter of credit the applicant or issuing bank can amend or cancel the same without the consent of other parties or notice because the issuing bank is reserved with the right to revoke the same without notice to other parties. revocable letter of credit are very rarely used.a re-vocabel LC must indicate so in the letter of credit itself. in absence of which LC will be deemed as irrevocable as per UCPDC 500.

LC which can not be cancelled or amended within the validity without prior consent of the parties involved in Lc. especially beneficiary is called irrevocable LC. At Lc that does not specifically indicate as revocable is deemed as irrevocable LC.

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