Transferable Letter Of Credit

Summary of Transferable Letter Of Credit

A Letter Of Credit (read this and related legal terms for further details) that is transferable from the original beneficiary to a subsequent beneficiary. This type of credit is used when the original beneficiary is a broker or other intermediary who is not actually supplying the merchandise. The original beneficiary assigns the right to receive a portion of the proceeds of the credit in return for performing some of the actions prescribed in the credit (e.g., presentation of a negotiable bill of lading evidencing shipment of the goods).

(Main Author: William J. Miller)

Transferable Letter of Credit in International Trade

Meaning of Transferable Letter of Credit, according to the Dictionary of International Trade (Global Negotiator): A letter of credit where de beneficiary specified in the credit has the option of instructing his bank to transfer the credit fully or in part to another beneficiary. A letter of credit can be transferred if it is expressly designated as “transferable” by the issuing bank. This type of letter of credit enables intermediaries (first beneficiaries) to offer security in the form of a letter of credit to their suppliers (second beneficiaries). See letter of credit.