Best Trade Solution

Which of the following statements with regard to a revocable credit subject to UCP600 is correct?

a. A revocable credit may be amended but not cancelled by the issuing bank at any moment without prior notice to the beneficiary.
b. A revocable credit may be amended or cancelled by the issuing bank at any moment without prior notice to the beneficiary
c. A revocable credit can not be issued subject to UCP 600
d. A revocable credit must state in its terms under which conditions it may be amended or cancelled by the issuing bank.

Dear cmzr,

I think right answer is b.

Monir

answer is d. but I think it's b. Any idea which support d?

Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.

A credit is irrevocable even if there is no indication to that effect.

So I thinks D is correct.

A. Ahmed

"A credit is irrevocable even if there is no indication to that effect" This is not intended to imply that a revocable credit cannot be issued, but simply, that unlessthe LC indicates that it is revocable, the credit is deemed to be irrevocable. This is opposite to the stance under UCP500.

The answer is D because of the use of the word "amended" in A & B, and because of the fact that it is subject to UCP600, requiring the issuing bank to follow process under Article 10. This thefeore, excludes A & B as possible answers.

C must also be excluded,because the statement is patently incorect.

Therefore, ( although the process is not prescribed under UCP600) the only possible answer is D

Dear abrar,

I could not understand your explanation. First of all revocable credits are not coverd in UCP 600. As a result, Can 10th article applied to a revocable credit?

Also why a revocable credit can't be amended while it can be cancelled? I think cancellation is the biggest and the most crucial amendment in its own. In addition to that, the last edition of official book of cdcs indicates on page 91 that:
".... The second key elemet is that a revocable documantary credit may be amended or cancelled by the issuing bank:

at any moment
without prior notice to the beneficiary."

Other comments are welcomed

IMHO only establishing the basis under which a credit can be revoked, i.e. using the words of art 8 ucp500, the rule of art 3 will be modified.

Dear Pal,

My opinion is that revocable LC is not recommended & encouraged under the concept of UCP600 as it may defeat the spirit of LC. Therefore the design of UCP600 is intentedly not for revocable LC which if so issued might create certain confusion & unanticipated argument in case of dispute.

In the event that an advising bank is asked to advise such revocable LC, it is recommended not to advise the same but inform the sending party and the reason in above paragraph. As the LC issuing bank, they should explain the matter to LC applicant & explore the reason behind and/or ture intention of the parties to see if there is other solution/ instructment best fits their needs.

Rgds

"First of all revocable credits are not coverd in UCP 600. As a result, Can 10th article applied to a revocable credit?"

Revocable credits are not catered for under UCO600, but nevertheless, a bank is not precluded issuing such a credit under UCP600. It would follow, that if subject to UCP600, the credit ( revocable or otherwise) must follow the rules set out thereunder.

"Also why a revocable credit can't be amended while it can be cancelled? I think cancellation is the biggest and the most crucial amendment in its own. In addition to that, the last edition of official book of cdcs indicates on page 91 that:
".... The second key elemet is that a revocable documantary credit may be amended or cancelled by the issuing bank:

at any moment
without prior notice to the beneficiary."

I suggest ( however impractical this may be) UCP600 rules must be adhered to, even in the case of a revocable LC, if it is subject to the Rules. Therefore, without proper qualification or modification to the Rules, the fact the credit may be stated to be Revocable, may have limited effect in being able to exercise the revocation.

As regards the extract from the CDCS guide, does the guide indicate that such actions may be exercised even if the credit is subject to UCP600?

Guide indicates as follow: " Revocable documentary credits are rarely used and are not covered in UCP 600. The documentary credit specialist should, however, be aware of the functions of a revocable documentary credit...." and defining the characteristic of revocable credit. There is not a definite answer to your question abrar. But I presume that book defines revocable credit which is subject to UCP 600.

It is clear revocable credits are not covered under UCP600 To Get the revocable credit under the UCP600, it is very important to define under what conditions of the revocability. Once this is defined we can relate the other terms with UCP 600

I think right answer is C.

b is the right one

B is correct one

Hi,

In my opinion the answer is D. UCP 600 does not cover Revocable LCs. However if such LCs are issued than as per my understanding option D can be considered.

Thanks

Reference:
Professor James E. Byrne:
“The Comparison of UCP600 & UCP500”
page 48 -
# 12. Revocable Credits under UCP600.

Best regards
Kim

www.remburs.com

what is the correct answer for the above

Hi !
So far my knowledge goes-
1) Option A is wrong .
2) Option B is partially correct, but it does not mention the issue regarding consent of the beneficiary.
3) Option C is correct
4) Option D states must, I have an objection about the word must.

So I am going for Option C.

But I have a question, is it possible to issue revocable LC subject to UCP 600?

Regards,
Shafique