QUESTION
Andy writes:
I need to know the followings:
– If you kindly help me.
1. Drawee Field is X Bank in original LC. What would be the Drawee field (42D) in the transferred LC with substitution ?
2. In case of LC is being transferred to other country, then what will be in the field, Date & Place of Expiry ?
3. In 41A: Available with..by in original LC is Any Bank in [1st Beneficiary's country] by negotiation, then what will be in that field in transfer LC ?
It would help me if you answer my question.
Thanks
———-
ANSWER
Hi,
1) As you know, under a transferred LC, the transferring bank would undertake only to remit funds upon receipt of the proceeds from the issuing bank. Where the 1st beneficiary fails to substitute the invoice and draft on first demand, the transferring bank may forward to the issuing bank the douments (including the drafts) presented by the 2nd beneficiary. So, drawee in the transferred LC remains the same as that in the original LC, i.e., X Bank.
2) The place of expiry must match the place of the nominated bank with which the transferred LC is available. So, if the transferred L/C is available with any bank by negotiation, then the place of expiry will be in the 2nd beneficiary’s country notwithstanding whether it is different from or the same as the transfering bank’s country. The date of expiry may be curtailed.
3) Assuming the place of expiry is changed to the country of the 2nd beneficiary, the availability remains the same, i.e., available with any bank by negotiation. The only question is whether or not the nominated bank in the 2nd beneficiary ‘s country is willing to negotiate. Please note again that the transferring bank will remit the funds only after receipt of the proceeds from the issuing bank.
Best regards,
Mr. Old Man
