The Revocable Letter of Credit (LC) is a commonly employed financial instrument within the realm of international commercial operations. In this particular form of letter of credit, the bank that issues the credit possesses the authority to modify or terminate the credit without providing advance notification to the recipient of the funds. The ability to alter or rescind the conditions of the Letter of Credit (LC) offers a degree of ease for the purchaser and the bank providing the LC, but it can also introduce potential hazards for the seller or recipient.
In the context of a Revocable Letter of Credit (LC), it is permissible for both the buyer and the issuing bank to modify or terminate the LC, encompassing its terms, conditions, or even its very existence, until such time that the beneficiary has received payment or acceptance. The inherent characteristics of this particular sort of letter of credit render it less secure for the recipient, hence resulting in its relatively lower prevalence in international commercial transactions.
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