Letter of Credit Forum

thanks dear phill ,,

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any other openions are appreciated 

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regards 

Hello Ahmadov

(I think your question is: can the beneficiary cancel without the applicant’s approval?)

I believe that once the credit is opened, it is an offer by the issuing bank (and or confirming, negotiating bank etc if applicable) to the beneficiary. It is not a binding contract until the beneficiary accepts the offer. Accordingly, if the beneficiary never submits documents, the offer will expire, but in such a case the beneficiary has caused no breach (assuming that there is no external private undertaking between the parties to the credit which would make the beneficiary’s compliance compulsory).

So, a beneficiary cannot ‘cancel’ the issuing bank’s offer, but they can decline to act upon it, in which case it will fall away at the expiry date.

I also believe that the applicant is not a party to the credit. The contract is between the issuing bank and the beneficiary (and other intermediary banks if applicable).  Whatever loss the ‘applicant’ may suffer by the beneficiary not responding to the credit, the BUYER may have recourse for against the SELLER in terms of the underlying sales contract, but the applicant has no rights in terms of the credit per se.

I am open to correction on these points so others may have a more definite answer for you.

I wish you well.

Cheers

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