Letter of Credit Forum

What should be happening in principle is that the beneficiary should be assigning a part of the proceeds (not the performance obligations) to you. Your contract remains that between you and the beneficiary.

You should have received a Letter of Assignment from the "nominated" bank under the LC, which should indicate that the bank has received a valid Notice of Assignment from the LC beneficiary, recognising you as a bonafide assignee under the LC, and subject to compliant presentations being made under the LC, and subject to funds being freely disposable, payment would be made to you for the value of the assignment.

Points to note:

1. Whilst the assignment notice may be considered irrevocable from the point of view of the assignor, there may be circumstances (however remote) which might prevent the bank from paying. Injunctions, manifest fraud, under the underlying contract between the LC beneficiary and LC applicant might all frustrate payment under the LC, and thereby payment under the assignment

2. Factors such as the beneficiary not performing  (i.e present documents under the LC), LC expiring, or if the documents are found to be discrepant, (and whilst these are factors outside your immediate control) would  all have a bearing in your receiving payment.

3. The beneficiary may also have assigned part of the LC to another assignee, and unless the bank which advises you of this on the assignment advice, you should be aware that payments from the proceeds of presentation, under the respective assignments would be paid out in order of precedence.   

As you will not be involved under the LC (and unless you have control over the beneficiary's performance under the LC)  , the assignment should not necessarily be looked at as a secure source of payment.