Revocable and Irrevocable Credit
Under revocable letter of credit, the opening bank reserves the right to cancel or modify the credit, at any time, without the
consent of the beneficiary. This leaves the exporter in lurches. The exporter may realize that the importer has instructed his banker to revoke the credit when the contract is at an advanced stage of execution or even after shipment. This method of payment is not popular as no exporter accepts this unsafe system of payment in case of irrevocable letter of credit, the opening bank has no right to change the terms of credit, without the consent of the beneficiary. The opening bank is irrevocably committed itself to make the payment, if the documents are in conformity to credit, terms specified in the letter of credit. So, the exporter is secured as above said problems do not remain in this type of credit.
According to UCP, the letter of credit should state whether it is revocable or irrevocable credit. In the absence of any specific mention, it is deemed that the credit is irrevocable credit.
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