I got one tricky case as below:
My bank opened a transferable L/C, in which we nominated IBK bank China to be the transferring bank. We later received the docs submitted by IBK Seoul, korea and the second bene is the first bene's branch in Seoul. The problem is we had not been advised by the transferring bank any information about the second bene.
In this case, does the action of IBK seoul to submit docs directly to our Bank comply with the Article 38 UCP 600? As we have endorsed the 1/3 B/l for our customer to take out the goods, what should we do?
In case the L/c has been fully transfered, does the IBK seoul have to present the docs through the transferring Bank as required in UCp 600.
Thanks for your help
LC Solutions
Hi Sir,
I learnt many traders facing problems with "LC Transferable" condition and further to my assessment of these problems they faced, I discovered that many traders have genuine trading deals but do not have crystal clear understanding of using such LC instrument to complete their commodities trading transactions successfully.
Well, LC instrument can be a very powerful bank instrument in particular for middle traders to make extra profits acting as direct buyer from seller and later re-sell to their buyer if they can find a real lenders (third party through his issuing banks) to help them complete their trading transactions successfully with additional minimal costs to be paid to the the lenders which make business sense.
In my opinion, "LC Transferable" clause is not important on the LC if middle traders are able to secure payment terms of minimum 30 days from direct sellers/producers/manufacturers. There are few ways to negotiate such commodities trading transaction to ensure it is fair and protect all parties involved (including the banks).
Please feel free to meet me over Yahoo Messenger Online Chat if before you execute your next trading transaction as I am able to offer more straight forward solutions involving LC to help you increase your profits as "middle traders".
My yahoo messenger id is singapore_consultant
Kelvin Yeo - singapore
With all the necessary respect
I can't really find, where you have answered the questions, but I can only see that you try to advertise your advising services.
If these services are supposed to be valuable, you should agree that "transferable or not transferable " is indeed often "t h e question" for middle traders as you called them.
So in order to keep this forum running, you are most welcome to give us your opinions, but with all respect and understanding for your situation, I kindly ask you to leave out the marketing - especially if written as long as in this posting.
-Each long journey starts with a small step-
Best regards
Frammi
Can any one tell me more about Transferable LC
Dear All,
I am new to join the forums.
Transferable L/C is also new to me too. I am working as an I/E trader and am going to deal with this type of L/C payment soon, as suggested by some of our trading parties. There is a lot of unknowns to me as how such type of L/C is working in between the Buyer, the Middle Trader and Producer.
Can any one please tell me more about this item?
How a Transferable L/C is working?
What particular points should be noted?
What risks will the 1st beneficiary (the middleman) bear?
How much will the bank charge for the L/Cs being received in and transferred out and documentations?
How is the shipping document being handled?
Will it be acceptable if the name of the producer is hidden from the shipping documents?
what documents should the Middleman (1st Beneficiary) provide?
It will be a great help if a copy of a model or used Transferable LC is available for previewing of its full contents. Where can I get a full view of the copy?
Awaiting responses from you all.
Many thanks to all.
Best regards,
jhung
Receipt of transferees documents.
Hi khanhvantran,
I would like to direct you to the following 2 articles of the UCP 600.
Article 3 which partially states:
"Branches of a bank in different countries are considered to be separate banks."
AND
Article 38k which states:
"Presentation of documents by or on behalf of a second beneficiary must be made to the transferring bank."
By looking at the above 2 articles and your question, the documents do not comply, even if the letter of credit is freely negotiable. Why do I say this,
1. If the letter of credit was transferred the second beneficiary's documents must go to the named transferring bank, which they did not.
2. If the letter of credit was not transferred the beneficiary information on the documents (especially the draft and the invoice) should be discrepant.
To answer your second question, "What should your bank do?":
You probably have a couple of options that you should review with your management and your legal counsel as you have released documents that you can not currently apply as a drawing under the letter of credit, but were submitted under the letter of credit.
Best of luck in the handling of this problem.
Best regards,
LC Sam
2 opinions
Hi !
1. Once you have released the documents to applicant, whoever the beneficiary is, you are liable to pay. (Law of Conversion)
2. You are right that the L/C may be fully transferred by the nominated transferring bank, and they forget to send you the information about the second beneficiary. Then the Second beneficiary sends the documents to you through their banker. However, neither the UCP nor ISBP say something about the status of this second beneficiary. Therefore, the issuing bank better clarifies the matter from transferring bank as soon as possible.
Hope it may help!
V.V.
There is no reason why
There is no reason why transferring bank should give you any information on the second beneficiary if you have already mentioned transferable on your lc. IBK seoul should have sent the documents to IBK bank China which is the transferring bank and you should have returned the document either to IBK Seoul or China. Normally in a transferable lc, invoice and draft should have been substituted by those of the first beneficiary. Were there no discrepancy in those documents? Now who will you pay? The First beneficiary or the second beneficiary?
If you have only endorsed the bl and not yet handed over same to your customer, may be you can come an arrangement with IBK Seoul and China.
glad