Original Credit

[hull]

Experts,

should i call back the original letter of credit while canceling it before the expiry of the credit?

[picant]

Hi pals,

I think that you can ask the original Letter of Credit in return, in case of cancellation, if letter of credit has been written in a formal paper with all stamps and signatures, but if issued by SWIFT MT700 it is not necessary, notwithstanding SWIFT users handbook required presentation of original letter of credit advice in case of freely negotiable instrument.

other comments appreciated

Ciao

[jmitra]

i find no reason to call back the original credit. such is generally required when the document is directly presented to the issuing bank and issuing bank wants to ensure that there is no other drawing under the credit. but in this case there is no question of drawing. besides the LC is valid till the expiry of the credit. i think even when the original credit is returned to the issuing bank, the beneficiary can still present the document within the expiry of the credit unless the beneficiary has agree expressly on the cancellation of the letter of credit.