Irrevocable Letter of Credit

 An irrevocable letter of credit cannot be amended or cancelled without the consent of the issuing bank, the confirming bank (if any), and the beneficiary. The payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary. The words "irrevocable documentary credit" or "irrevocable credit" may be indicated in the L/c.

 Irrevocable and Without Recourse Letter of Credit

 The irrevocable irrevocable letter of credit cannot be amended or cancelled without the consent of the issuing bank, the confirming bank (if any), and the beneficiary. The payment is guaranteed by the bank if the credit terms and conditions are fully met by the beneficiary. The words "irrevocable documentary credit" or "irrevocable credit" may be indicated in the L/c.

 Revocable letter of Credit

 A revocable letter of credit can be amended or cancelled by the issuing bank at any time without the consent of the beneficiary, often at the request and on the instructions of the applicant (buyer). There is no security of payment in a revocable letter of credit. The words "this credit is subject to cancellation without notice", "revocable documentary credit" or "revocable credit" usually are indicated in the L/c. Obviously, this type of L/c is highly risky from the beneficiary point of view.

 Confirmed Irrevocable Letter Of Credit

 An irrevocable letter of credit opened by an issuing bank whose authenticity has been confirmed by an advising bank (usually a prime world bank) and where the advising bank has added its confirmation to the credit is known as confirmed irrevocable letter of credit. The words "we confirm the credit and hereby undertake ..." or "we add our confirmation to this credit and hereby undertake ..." normally are included in the L/c. An exporter whose method of payment is a confirmed irrevocable L/c is assured of payment even if the importer or the issuing bank defaults. The confirmed irrevocable L/c is particularly important from buyers in a country which is economically or politically unstable. In a confirmed letter of credit, the exporter or the importer pays an extra charge called the confirmation fee, which may vary from bank to bank within a country. The fee usually is added to the exporter's account. The exporter may indicate in the sales contract that the confirmation fee and other charges outside the seller's country are on the buyer's account.

 Unconfirmed Irrevocable Letter of Credit

 An irrevocable letter of credit opened by an issuing bank but not confirmed by an advising bank (usually a prime world bank) is known as an unconfirmed irrevocable letter of credit. The promise to pay comes from the issuing bank only, unlike in a confirmed irrevocable L/c where both the issuing bank and the advising bank promise to pay the beneficiary.

 Restricted Negotiable Letter of Credit

 In a restricted negotiable letter of credit, the authorization from the issuing bank to pay the beneficiary is restricted to a specific nominated bank.

 Freely Negotiable Letter of Credit

 In a freely negotiable letter of credit, the authorization from the issuing bank to pay the beneficiary is not restricted to a specific bank, any bank can be a nominated bank as long as the bank is willing to pay, to accept draft(s), to incur a deferred payment undertaking, or to negotiate the L/c. The words "this credit is not restricted to any bank for negotiation" or "this credit may be negotiated at any bank", or similar words, may be indicated on the L/c.

 Revolving Letter of Credit

 When a letter of credit is specifically designated "revolving letter of credit", the amount involved when utilized is reinstated or replenished. In other words, once supply has been made and beneficiary receives payment for the shipment, the L/c amount becomes available again without issuing another L/c and usually under the same terms and conditions. The revolving L/c is used for regular shipment of a large quantity over a period of time (several months).

 Latest Negotiation Date

 The latest negotiation date is the last day of the period of time allowed by the letter of credit for the presentation of documents to the bank. The latest negotiation date may not necessarily be the L/c expiry date. For example, the latest negotiation date can be July 31, 2001 or 15 days after the date of shipment, whichever comes first. In case the L/c does not stipulate the latest negotiation date, it is within 21 days after the date of issuance of the transport documents, but on or before the L/c expiry date.

 Expiry Date and Place

 The expiry date and place is the last day of validity of the credit and the place allowed by the letter of credit for the presentation of documents for payment, acceptance or negotiation. In case the validity of an L/c is stated in a period of time, for example "this credit is valid for three months" or "this credit is available for two months" or "this credit is good for one month", but does not specify the date from which the time is to run, its validity starts from the issuance date of L/c by the issuing bank. The bank normally discourages stating the L/c validity in a period of time. In case the expiry date and/or the latest negotiation date falls on a day on which the bank is closed for reasons not including the acts of God, strikes, riots, civil commotions, lockouts, insurrections, wars or any other causes beyond the bank's control, the expiry date and/or the latest negotiation date is extended to the succeeding first day on which the bank is opened. Such extension, however, does not extend the latest date of shipment.

 Latest Shipment

 The latest shipment---latest date of shipment or last date for shipment---is the last day of the period of time allowed by the letter of credit for shipment, dispatch or taking in charge

 ransferable Letters of Credit

 A letter of credit can be transferable or non-transferable. The L/c usually indicates "transferable" in the case of a transferable credit. In the absence of such indication, the L/c is deemed to be non-transferable. In a transferable letter of credit, the first beneficiary (the exporter) may request the paying, accepting or negotiating bank to make the credit available in whole or in part to one or more second beneficiary or beneficiaries. The second beneficiary can be another exporter, trader or manufacturer. The L/c is expressly designated "transferable" by the issuing bank on instructions of the applicant. The letter of credit that was transferred or made available to the second beneficiary is known as the transferred credit. The bank that makes the transfer is known as the transferring bank.

 Non – transfrable Letter of Credit

 In a non-transferable letter of credit, the beneficiary cannot transfer the credit to other beneficiary. The L/c usually indicates "non-transferable" or "not transferable. " Even if such indication in not there, the L/c is deemed to be non-transferable.