Document background
The Letter of Credit Transferable is a sophisticated financial instrument used in international trade transactions where intermediaries are involved. This document becomes necessary when a middleman or trader (first beneficiary) needs to transfer their rights under the letter of credit to their supplier (second beneficiary). Under US jurisdiction, these documents are governed by UCC Article 5 and typically incorporate UCP 600 rules, providing a standardized framework for international banking practices. The document specifies critical elements including transfer conditions, document requirements, payment terms, and bank responsibilities. It's particularly valuable in transactions where the original beneficiary acts as an intermediary and needs to facilitate payment to their supplier while maintaining their position in the trade chain. The transferable nature of this letter of credit allows for complex international trade structures while maintaining the security and payment assurance that letters of credit are known for.
