Letter of credit (confirmed vs. unconfirmed)?

Question

Hi friends,

I've read about confirmed and unconfirmed LC and so I understand the basics of it, but can anyone give me more insight as to why an (oil) importer would want an LC that is both irrevocable and unconfirmed at the same time?

Thanks

Answer 1

Now all the LC is irrevocable. An unconfirmed lc is always safe for the importer. For confirmed LC an importer may need to pay extra charge if the charge payable by him and thus cost of the goods rise. Moreover for confirmed LC third bank ( Top International Bank)  give  extra guarantee to the supplier bank about the payment. And Base on this as soon as the shipment made the supplier can negotiate the document in the counter of his bank and release the payment at the earliest. And in this case if any problem arises  as like as quality problem etc the importer  has nothing to do as he is bound to make the full payment.