Will an issuing bank create a letter of credit amendment without instructions from the advising bank?

The correct understanding revolves around the role and responsibilities of the issuing bank and the advising bank in the letter of credit process. The advising bank acts as a conduit for the beneficiary and facilitates communications between the beneficiary and the issuing bank.

In this context, an issuing bank is not authorized to create an amendment to a letter of credit without explicit instructions from the advising bank or the applicant who issued the letter. This requirement ensures that all changes are correctly aligned with the original terms and intentions of the parties involved, preventing any unilateral decisions that could affect the validity and enforceability of the letter of credit.

When it comes to amendments, they should be initiated based on clear instruction to maintain the integrity and intended purpose of the letter of credit as a financial instrument. The influence of the advising bank is critical in managing these changes, thereby establishing that direct instructions are indeed necessary for any amendment to take place.