Saturday, June 11, 2011

Different between Revocable and Irrevocable Letters of Credit ( L.C )

Revocable vs. Irrevocable Letters of Credit

A Letter of Credit may be revocable or irrevocable. In a revocable Letter of Credit, the buyer's bank has the right to cancel or alter its obligation at any time before payment even if goods were shipped in reliance on the LOC. This circumstance can occur if there is a change in the buyer's stability which could impact the buyer's ability to pay on the terms of the letter of credit. An irrevocable Letter of Credit cannot be altered or cancelled without the consent of the seller. Any change to an irrevocable Letter of Credit requires the consent of all parties.

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