Revocable Documentary Credit

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A revocable credit may be amended or cancelled by the issuing bank at any moment and without prior notice to the beneficiary. However, Article 8 UCP No. 500 states "the issuing bank must:
  1. reimburse another bank with which a revocable credit has been available for sight payment, acceptance or negotiation for any payment, acceptance or negotiation made by such bank prior to receipt by it of notice of amendment or cancellation against documents appear on their face to be in compliance with the terms and conditions of the credit;
  2. reimburse another bank with which a revocable credit has been made available for deferred payment, and if such a bank has, prior to receipt by it of notice of amendment or cancellation taken up documents which appear on their face to be in compliance with the terms and conditions of the credit".
Since a revocable credit is fraught with danger, the seller/beneficiary should avoid accepting such a credit. Nevertheless, revocable credits are seldom being used in practice.

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