Legal Definitions - irrevocable

The term irrevocable describes something that cannot be changed, canceled, or taken back once it has been established or agreed upon. It signifies a final and binding commitment or action that cannot be reversed by the party who made it.

• Imagine a person setting up an irrevocable trust for their children. Once the assets are transferred into this trust, the person who created it (the grantor) generally cannot reclaim those assets or alter the terms of the trust. This arrangement is irrevocable because the grantor has permanently given up control over the assets, ensuring they will benefit the designated beneficiaries according to the trust's original terms, without the possibility of the grantor changing their mind later.

• Consider a situation where a potential home buyer pays a small fee to a seller for an option contract to purchase a house. This option makes the seller's offer to sell the house irrevocable for a specific period, say 30 days. During those 30 days, the seller cannot withdraw their offer or sell the house to someone else, even if they change their mind. The buyer, however, is not obligated to buy but has the exclusive right to do so, demonstrating the one-sided irrevocability of the seller's commitment.

• In international trade, a buyer might arrange an irrevocable letter of credit through their bank to guarantee payment to a seller. Once this letter of credit is issued and accepted by the seller, the bank cannot withdraw its promise to pay the seller, provided the seller meets the specified conditions (like shipping the goods). This provides the seller with a strong assurance of payment, as the bank's commitment is final and cannot be revoked, even if the buyer later tries to cancel the order.