Letter of Credit Forum

Hello Shahidul

Pan is correct. The beneficiary does not cancel the credit but simply does not use it, and so it expires.

It could be, for example, that the sales contract has been rendered invalid through circumstances outside of the credit or perhaps it may be that the credit terms do not agree with the sales contract terms – given that the sales contract is the paramount contract – and so the seller declines to act as beneficiary.

Whether the seller has the option to refuse the LC as a right acquired under the sales agreement will be determined only by the terms of that sales agreement not the credit. Equally, if the applicant as buyer has recourse to the seller it will be as the buyer through the sales contract terms and not as the applicant through the credit process.

I wish you well with this

Cheers

phill

“...in the kingdom of the blind, what you see is what you get...”

Hi friend,

beneficiary may opt for no utilization of an l/c :

It will be responsible as per contract terms, but outside l/c.

The l/c remains valid till the expiry, but ....

Other comments appreciated

Ciao