Mr Old Man Q&A IS ASSIGNMENT OF PROCEEDS UNDER A DOCUMENTARY CREDIT SUBJECT TO THE EXPIRY DATE? By Mr Old Man Posted on 8 seconds ago 2 min read 0 0 0 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear friend We hope my email find you well I need your opinion about the assignment of proceeds under the documentary credit is it subject to the expiry date . Thanks for your support Firas Jawad —— ANSWER Hi Firas, Thank you for your question. Article 39 of the UCP deals with the assignment of proceeds, which refers to the beneficiary’s right to instruct that all or part of the proceeds under a documentary credit be paid to a third party. This assignment is usually irrevocable once made. An assignment of proceeds is different from the transfer of a credit. It does not give the assignee any rights to present documents under the credit — it only entitles them to receive the funds once payment is made to the beneficiary. Assignments may be made: • Between the beneficiary and the negotiating bank • Between the negotiating bank and another bank or forfaiter • Between the beneficiary and a supplier or subcontractor • Or to any third party Importantly, in my view, the assignment of proceeds is not subject to the expiry date of the credit, because it concerns the right to payment, not the presentation of documents. As long as the credit is valid and payment becomes due under it, an assignment of proceeds made before or after expiry can still be honored — provided the underlying payment obligation has already arisen. Best regards, Mr. Old Man