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FROM wuhu73

Can it be more than 1 entity as the Applicants and Beneficiaries? For examples, in a commercial or standby credit , let A and B as the Applicants and C and D as the Beneficiaries. I know there are additional conditions to cope this scenario, such as the clause of joint and several benefit for the Benef. and liability for the Applicant.

Thank you for comment.


FROM Peter M
Multiple applicants and beneficiaries

The standard arrangement is that there is one applicant, one primary beneficiary and (possibly) any number of secondary beneficiaries through a transfer arrangement.

I would not say that what you are asking for is impossible, but it is extremely unlikely. Issuing banks do not like surprises and are used to issuing on behalf of single client to s single beneficiary – UCP supports this and so do almost all legal systems around the world.

Moving outside of this is dubious, doubtful and potentially dangerous for all the parties involved. If the Standby has multiple beneficiaries, who has the right to claim? All beneficiaries?, some beneficiaries but not others? What amount can each of them claim?

Maybe if you let us know the situation you are facing the members here could come up with a better solution for you.

FROM wuhu73

I will have a situation that

I will have a situation that a client as the Applicant would like to have a SBLC issued ifo 2 benef. who are in fact belong to the same organization. I realize that there will be an unclear picture how much each benef. may claim for. A lawyer can draft such a SBLC. But client does not want to pay the lawyer because credit amount is too small to justify. If no template is available, looks like we better to issue 2 individual SBLC instead of one.

Anyway thanks for the advice.



1 applicant and 2 beneficiaries

I have had the opportunity to work on a letter of credit that has 1 applicant and 2 beneficiaries. While it is not a normal practice, it can be done.

The particular credit in question went to 2 different agencies of the same government entity. The amount of the credit covered the total obligation to the government.

Here is how I did it.
1. The letter of credit indicated both parties as beneficiaries.
2. The letter of credit indicated that either party could draw under the letter of credit up to the total amount of the letter of credit less any previous drawings done by either beneficiary.
3. The letter of credit required the presentation of the sole original letter of credit.
4. The letter of credit indicated that the original was sent to beneficiary A and a copy to beneficiary B. It also indicated that the beneficiary that did not hold the original in its possesion must collect the original from the other beneficiary for a drawing.
5. The letter of credit indicated that once a drawing was submitted, the letter of credit would be endorsed by the drawing amount and returned to the presenting beneficiary.
This was a special circumstance for a special beneficiary, and I would not recommend that this be an everyday practice. Before you consider doing this, make sure you understand the underlying transaction and why there need only be 1 letter of credit. In this instance, the contract was with the umbrella agency that covered both governmental agencies, but the contract allowed a payout to either agency as the item sold was utilized by both agencies.

I hope this helps out.
LC Sam

Multi-beneficiary LC

Hi LC Sam,

Interesting in deed.

Never during my 20 years involved in LC world have I seen LC issued in favour of multiple beneficiaries.

I agree with you that LC issued in the manner as your description is possible and quite acceptable. However, it’s too complicated and saves no costs for the applicant. So, it should not be encouraged.

For reference regarding the complexities of multi- beneficiary LC, I quote herewith the following comment of T.O. Lee, a well-known LC expert:


Before we issue an LC allowing two beneficiaries to draw (other than in transferable form), we have to decide whether they be restricted to an agreed percentage in the total drawing amount available with the LC? The next question is should they draw the LC in "jointly or severally" manner? That means if the other beneficiary does not make any drawing, then may the remaining beneficiary draw the full available LC value before expiry?

Can the two beneficiaries negotiate their documents with two negotiating banks, in an open negotiation LC?
Do we need two advising banks for beneficiaries domiciled in two countries?
Do we need two confirming banks? Are they jointly and severally responsible for the full LC payment obligations?
Can one part be transferable and another part be not transferable?
Can one part be available for sight payment and another part by deferred payment or negotiation to suit the different needs of the two beneficiaries?
Can we call for a BL in one part and AWB in another?

We must clear all these hurdles before we issue such LC.

We do not wish to go on further on hypothetical cases.


From a practical point of view, why not issue two LCs each to a separate beneficiary to avoid such complexities? Unless one or both of the splitted LC is below minimum charge level, there is no savings for a single LC putting the two beneficiaries together. Those banks that charge for excessive details may charge for the additional beneficiary and the second advising bank. The savings may be negligible. From a cost against benefits/risk point of view we do not encourage such contemplation.
Scholars in the universities like hypothetical cases because they are not good at practical issues. They may not have traded in their whole lives. On the contrary, consultants put practical issues on top priority because their customers come to them for solutions to their problems consistent with the theories but have no interest in the theories themselves.

Best regards,
Nguyen Huu Duc
Multi-beneficiary LC

Hello Nguyen,

I completely agree with your statements. It was a very special circumstance which we could completely control as the letter of credit was a domestic standby letter of credit which was available only with us.
I would not suggest making the issuance of multi-beneficiary credits a normal practice.

Best regards,
LC Sam …

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