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LC IS TRANSFERABLE

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Shahed – Canada Posted 22 Oct 13

Credit only states 'This Credit (LC) is transferable by the Beneficiary"
Do you think this clause is acceptable ?

(Note that there is no nominated transferring bank in this clause nor it states the beneficiary would request the Issuer to transfer the Credit. It looks like the beneficiary can transfer the Credit to the second beneficiary by its own without referring to the Issuer).
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Mr. Old Man Posted 25 Oct 13

Hi,

The sentence “This credit is transferrable by the beneficiary” implies that the first beneficiary is allowed to have the credit transferred (by the transferring bank) to the second beneficiary.
If the credit is available with a named nominated bank then that nominated bank may act as the transferring bank. If the credit is available with any bank then it needs to nominate a named transferring bank.

The beneficiary cannot act as a transferring bank.

Regards,
N.H.Duc

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2 Comments

  1. Aditi Jain

    June 20, 2015 at 10:34 pm

    Mr. Old Man,

    It will be helpful if you could help me out regarding Transferable LC.

    I have got Transferable LC with Clause that ” No Third Party Documents will be accepted.” and Buyers bank has refused to amend this detail.

    But the B/L and Certificate of Origin and all will have third party as exporter.

    Please can you help me out as I am new to this and time is running out for LC Shipping time period.

    Reply

    • mroldman

      June 21, 2015 at 8:13 am

      Hi,
      ISBP 746 paragraph 19 (d) says that “third party documents not acceptable” – has no meaning and is to be disregarded.
      So the clause “No third party documents will be accepted” has no meaning, either and is to be disregarded.
      What’s more? The applicant bears the risk of any ambiguity on its instructions to issue the LC.
      Kind regards,
      Mr. Old Man

      Reply

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