Document background
A Transfer Letter of Credit is essential in complex international trade transactions where an intermediary party needs to transfer their rights under a letter of credit to another party, typically a supplier or manufacturer. This document, governed by U.S. banking regulations and international banking practices, enables the first beneficiary to transfer all or part of their rights to a second beneficiary while maintaining the security of the original letter of credit. The transfer must comply with UCC Article 5 requirements and typically follows UCP 600 guidelines. It's commonly used when middlemen, trading companies, or distributors are involved in international trade transactions and need to pay their suppliers using the same letter of credit received from their buyers. The document includes specific terms regarding the transfer, document requirements, and any modifications to the original credit terms.
