WHETHER A TRANSFERRED LC CAN BE TRANSFERRED TO A THIRD BENEFICIARY

QUESTION

Sir

I am trader in petroleum field. I have the following issue and need your advising:

My client is the first beneficiary who will receive the LC via mt700 from his end user
then will transfer it to me as the second beneficiary via MT 720

Now I want to transfer MT 720 to the end seller as the third and last beneficiary
Can that be done and how?

Please even send me draft for such this transferable LC via MT 720

Thanks
IBRAHIM
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ANSWER

Hi,

A transferred LC cannot be transferred at the request of a second beneficiary to any subsequent beneficiary. I am afraid you are unable to transfer the transferred LC to the third beneficiary

Kind regards,
Mr. Old Man
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Sir

Thanks but what I should do to avoid losing the deal ?

Thanks
IBRAHIM
————-

Hi,

Not simple but you can request your bank to issue a back to back LC in favor of the supplier. That is to say, a new LC is to be issued based on the transferred LC.

It’s possible but I’m not sure if your bank agrees to issue such LC.

Kind regards
Mr. Old Man
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QUESTION

Dear Sir,

Thanks in advance for your reply and assistance.

I am going to get a transferable LC via MT 700 and I will be first beneficiary. I will transfer it to end seller.

Questions:

1/ Will it be transferred also via MT 700 to end seller or will be transfer it through other kind of swift?

2/ Can I ask the issuer of LC to make it transferable more than 2 times and how?

3/ The LC will be divisible to keep my profit in my bank and transfer only the net to end user, is it possible and how we do it?

Please need reply to each on
Thanks

MR. IBRAHIM MOSTAFA

G. Director
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ANSWER

Hi,

1/ The transferring bank shall use MT 720 to advised the second beneficiary about the terms and conditions of the transferred LC.

2/ A transferable LC can be transferred to more than one second beneficiary provided partial shipments are allowed but the second beneficiary cannot transfer the transferred LC to any subsequent beneficiary.

3/ The second beneficiary must present the documents to the transferring bank who will request the first beneficiary to substitute his draft and invoice. The first beneficiary’s invoice value would be higher the second beneficiary’s invoice value. The difference is the first beneficiary’s profit margin.

Upon receipt of the payment from the issuing bank, the transferring bank would pay the second beneficiary the amount under the transferred LC and the first beneficiary the remaining amount under the transferable LC.

Kind regards.

Mr. Old Man