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BASIC FORMS AND TYPES OF DOCUMENTARY CREDIT Basic forms of documentary credit

A revocable credit can be amended or cancelled by the issuing bank at any time without prior notice to the beneficiary (Article 8(a)). A bank will thus not be liable to the beneficiary (exporter) for revocation of the revocable credit before the transaction is completed. The standard form of instructions by the buyer to the issuing bank in respect of a revocable letter of credit usually contains an express provision to the effect that the bank may revoke the credit at any time during its currency. Because of its revocable nature such credit cannot be confirmed by a correspondent or advising bank which will usually advise that the notification ‘is merely an advice of opening of the (subject credit) and is not a confirmation of the same’3 and that therefore the credit is subject to cancellation or modification at any time without notice. As such, the revocable credit fails to provide adequate security for the beneficiary exporter.