Transferable versus non-transferable letter of credit
Author: Resources
Transferable and non-transferable: what's the difference?

by Tekle Sebhatu

Question:

What is the exact professional difference between transferable LC vs. non transferable LC? As a buyer we face to sellers who give us a price for transferable LC and increase the price 2% for non transferable LC. What are the reasons and results? Thanks.

Answer:

Dear, Ehsan: A transferable letter of credit is a type of a letter of credit under which a beneficiary (exporter or seller) has the right to give instruction to the paying or accepting bank to make the credit (funds) available to one or more third parties, sometimes referred as secondary beneficiaries. A non-transferable letter of credit is when the bank makes credit available to the beneficiary only and cannot be transferred to any other party. As to why your seller is increasing by 2% for non transferable letter of credit is something that you have to specifically ask the seller why there is that additional 2%. One possible reason could be that the seller is passing fees that he is charged by his bank .

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Re: Re: Transferable versus non-transferable letter of credit
by Oneuni on 25 Jul 2008 07:44

Quoting from [shahidshada]:


Replying to [Resources]:Let take an example that Party A opens a tranferable letter of credit in favour of party B.party B purches products from Party C and C supplies it.What should be done so that party C and A do not know the contact of each other.


     How about  to use back to back L/C i/o ?


     rgrds

Re: Re: Transferable versus non-transferable letter of credit
by Ranger on 25 Jul 2008 09:58

Quoting from [shahidshada]:



Replying to [Resources]:Let take an example that Party A opens a tranferable letter of credit in favour of party B.party B purches products from Party C and C supplies it.What should be done so that party C and A do not know the contact of each other.



Under UCP 600 all L/C's are considered to be transferable unless otherwise stated.

Ranger

UPDATED :  I incorrectly made the above statement.  UCP 600 states " Transferable credit means a credit that specifically states it is "Transferable"".   My appologies for the wrong statement and my appreciation to Catalyst for pointing it out.

Ranger

Transferable versus non-transferable letter of credit
by Catalyst on 29 Jul 2008 04:12

Quoting from [Ranger]:

Quoting from [shahidshada]:



Replying to [Resources]:Let take an example that Party A opens a tranferable letter of credit in favour of party B.party B purches products from Party C and C supplies it.What should be done so that party C and A do not know the contact of each other.

Under UCP 600 all L/C's are considered to be transferable unless otherwise stated.

ranger

Suggest pl refer article 38(b) of UCP 600.

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