Upon examination, the seller may find problems. Some examples:

1. The seller might disagree with the terms and conditions. For example, the transaction price listed in the credit may be lower than the originally agreed upon price, or perhaps the seller has specified that the total price is to include shipping, whereas the seller originally quoted a price without shipping.
2. The seller might find himself unable to meet specific requirements of the credit. For example, the time may be too short to effect shipment, or certain documents may not be available.

If the buyer still wants to proceed with the transaction, but with modification to the terms of the credit, he or she should contact the buyer immediately and request an amendment.

Amendments must be authorized by the buyer and issued by the issuing bank to the seller through the same channel as the original documentary letter of credit. This can be an involved undertaking so any amendments should be initiated only when necessary and as soon as a problem is identified.

Refer to the diagram above for each numbered step:

Seller

1. The seller requests that the buyer make an amendment to the credit. This can be effected by a telephone call, a fax letter, or by face-to-face negotiation.

Buyer

2. If the buyer agrees, the buyer orders the issuing bank to issue the amendment.

Issuing Bank

3. The issuing bank amends the credit and notifies the advising bank of the amendment.

Advising Bank

4. The advising bank notifies seller of the amendment.