Irrevocable L/C

An irrevocable L/C (Irrevocable Letter of Credit) refers to a letter of credit that, once issued, cannot be unilaterally amended or revoked by the issuing bank during its validity period without the consent of the beneficiary and relevant parties (such as the issuing bank and confirming bank). Its core feature is that the issuing bank's payment undertaking is definite and irrevocable; as long as the beneficiary submits documents complying with the L/C terms, the issuing bank must pay. Applicable scenarios: It applies to the vast majority of international trade settlements, especially transactions with high requirements for payment security for the seller (beneficiary), such as bulk commodities, machinery and equipment, etc. Points to note: Although irrevocable, it can still be amended if the beneficiary agrees; if the issuing bank becomes insolvent or foreign exchange controls are imposed in its country, risks still exist, and confirmation may be required. Difference from a revocable L/C: A revocable L/C may be amended or revoked by the issuing bank at any time without notifying the beneficiary, posing great risks to the seller, and is now rarely used. According to UCP600, an L/C is deemed irrevocable by default.