It is hard to imagine, at least materially, that either of the business transaction parties adhere to his/her commitments spontaneously. This is due to the fears inflicted on both parties, which consequently resulted in the creation of distrust between both parties. Therefore, it was better to devise a method represented by legal and institutional forms that will ensure availing guarantees for two remotely separated persons in terms of place. Thus, each party will start implementing his/her obligations with no fear of the non fulfillment of the other party.
For these reasons, and in connection with the documents, the documentary letter of credit was devised, which was made into several forms, dependent on the angle through which it is viewed. It is, in terms of the bank adherence power, confirmed or not confirmed; and in terms of the involvement of many banks in the transaction, it is reinforced or not reinforced; still in terms of whether or not terminable, it is revocable or irrevocable. Contrary to the revocable letter of credit, which the bank opens, under the order of the buyer, for the beneficiary of the seller, he/she leaves for him/herself the choice of revocability, any time in this letter of credit, without arranging any commitment by the bank toward the beneficiary; the irrevocable letter of credit represents to the beneficiary not only the possibility of getting the price of the goods from the bank that opened the L/C, but also provides to him/her an quasi absolute guarantee that the bank will honor the payment of the price of the goods, once he/she presents the required documents and honored all the conditions duly stipulated in the L/C. But before this final, irrevocable, non-amendable undertaking (except under the agreement of all the parties), there is a problematic issue that is raised: “ To what extent is the bank capable to recourse to the beneficiary following the implementation of the documentary letter of credit contract?”
This study tackled this problematic issue through the illustration of the legal position of the bank in terms of its relation with the beneficiary of the irrevocable documentary letter of credit, post implementation
Al-Sofani, Abdullah Khalid
"Bank Recourse to the Beneficiary Post Implementation Irrevocable Documentary Letter of Credit Contract )A Comparative Study(,"
Journal Sharia and Law: Vol. 2012
, Article 2.
Available at: https://scholarworks.uaeu.ac.ae/sharia_and_law/vol2012/iss52/2