The Right of the Beneficiary When Executing the Irrevocable Documentary Credit

Abstract

The principle of irrevocable documentary credit involves a direct personal commitment by the beneficiary and it is definite, final and irrevocable by cancelling or modifying it unless all the parties agree. The principle of irrevocable documentary credit is that the right of the beneficiary in its framework is irrevocable, and that the right of the beneficiary derives the character of irrevocability by comparing it with the contract of opening documentary credit through which the bank may revert to it. However, in front this final irrevocable commitment which can't be cancelled or modified except with the agreement of all the parties, there are several problems which are considered the questions of this study including: What is the degree of independence of the right of the beneficiary for opening the credit concluded between the buyer and the bank? Moreover, specifying the time in which this credit is conferred by its inability to return it, is it considered irrevocable from the date on which the buyer issued his order to the bank to open the credit? Or is it from the date on which the bank receives these instructions? Or is it from the date on which the bank informs the beneficiary of opening the credit? Or from the date on which the beneficiary knows that the credit was opened in his favor? What is the degree of possibility of recourse to this credit in the case of the buyer’s poor financial situation? In this framework, this study aims to answer these questions, and to reach to important results in the framework of banks' dealing with their clients when opening documentary credits. Doing so, this study reached several results, the most important of which was that the beneficiary’s right towards the bank is characterized by independence, whether in the contract of sale or the opening contract concluded between the bank and the buyer and the bank. If the credit is fulfilled, it fulfills an obligation on the source of the letter of credit and not as an agent on behalf of the buyer or the beneficiary. This study made several recommendations, the most important of which was to enable the buyer to reserve the amount of the credit precautionary under the authority of the issuing bank in order to guarantee his rights before the seller in case the latter implements the credit on other than its conditions according to the rule of seizure of what the debtor is under the control of others.