Irrevocable Letter Of Credit Meaning

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Irrevocable Letter Of Credit Meaning. Because banks do not want to endanger themselves they may keep the credit limit low in the first year until they are satisfied that the customer can repay drafts drawn against the clean letter of credit. If irrevocable the buyer cannot cancel or modify the letter of credit once it is issued.

Irrevocable Letter Of Credit Sample Letter
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Because banks do not want to endanger themselves they may keep the credit limit low in the first year until they are satisfied that the customer can repay drafts drawn against the clean letter of credit. For example issuing bank has no power to modify letter of credit terms if beneficiary does not find them acceptable. Normally the Letter of Credits issued is irrevocable which means that no single party can unilaterally make any changes to the LC unless it is mutually agreeable to both the parties involved.

Therefore to a certain degree it is more secure.

However an LC is said to be revocable if the terms allow any one single. An irrevocable letter of credit is a guarantee from a bank issued in the form of a letter. Letter of Credit Expiry Date. For example issuing bank has no power to modify letter of credit terms if beneficiary does not find them acceptable.