| (1) Definition |
- L/C transferring is referring to a beneficiary to transfer its right to third parties entirely
or partially. This is possible if a word 'Transferable' is indicated in the master
L/C.(The Sub-Article No. 48-b of UCP) (Other expressions such as divisible and
assignable other than word transferable is are not recognized as a word for
transferring.) |
|
(2) Cases likely to occur transferring |
1 If a beneficiary is not registered as a trader.
2 If a beneficiary does not have supplying ability or if received L/C in the purpose of
transferring difference profit.
3 If a beneficiary reserves no quota for the said goods.
4 If a beneficiary is trying to find the favorable supplying business parter as a importer
or as a representative.
5 If receive L/C from an export association or as a the partner's association name and
to assign an export performance to each associator. |
|
(3) Terms for Transferring |
| <1> Nominating a transferring bank |
|
- If a bank to take charge of nego, pay, take over and usance is nominated with
transferable L/C: The nominated bank is the transferring bank.
- For freely negotiating L/C: Restricted to nominate a transferring bank, UCP 500
revised its regulation to exercise transferring assignment.
- If a transferring bank is not nominated in L/C even though it is freely negotiating
L/C : The 1st beneficiary (first beneficiary) nominate a transferring bank before
concluding a transferring contract through amending process and through the
bank the transferring assignment should be performed.
(The Sub-Article No. 48-a of UCP) |
|
|
- Transferable wording should be indicated in L/C.
- Transferable Credit is a L/C that endowed the right to transfer to third parties
(second beneficiary) by a beneficiary for the entire L/C amount or partly. |
|
| <3> Number of transferring |
|
- Transferring L/C is restricted for 1 time however but if all the related parties
consent is made : Cancelling transferring and collect L/C to transfer to third parties again is not a violation to the 1st transferring principle. |
|
<4> As a general rule, transferring should be followed by terms of master L/C however,
the terms of master L/C can be changed for transferring in the following cases. |
|
- L/C amount, unit price
- Validity period, shipping period and reducing documents presentation period - Same coverage amount as the master L/C
- Substitution L/C applicant's name |
|
(4) The kinds of transferring |
|
- A transferring bank attach Advice of total transfer to master L/C and send to a
transferor and issue transferring L/C to a grantee.
- If total transfer is executed a grantee is to be exercise the right of a transferor.
- If installment shipping is restricted, only total transfer is possible. |
|
|
- Either only partial amount of master L/C is transferring or transfer to many grantee
by dividing master L/C in many.
- Special traits |
|
1 Master L/C term should permit partial shipping.
2 When a transferring bank is exercising transfer, the partial transfer details
should be indicated on the back of master L/C.
3 Since the party of condition change is a transferor, a grantee can not approve
amendment request with one's own name.
4 If L/C that was transferred to a grantee has been modified according to UCP 500 : it prescribes to let a grantee to continue existence the changed L/C, and the original condition of the mater L/C to a grantee that rejected to continue existence.
5 If requested L/C transferring : A beneficiary should instruction to the 2nd beneficiary whether the 2nd beneficiary get to notify the amendment in person before a transfer is established. |
|
|
- When the country of a transferor and a grantee is different, is called overseas transfer. The over seas transferring purpose is to acquire transfer gain In most
cases, therefore, a grantee should be cautious and prevent unpaid. |
|
(5) The right of a transferor |
| <1> Invoice substitution and bill substitution |
|
- Even if a beneficiary did not reduced the amount by substituting own invoice with
the 2nd beneficiary's invoice by preparing as per master L/C unit price, the
original beneficiary has the right to substitute the invoice.
- The original beneficiary reserve the right to issue a bill for the gains between the two invoice and it is called invoice substitution.(The Sub-Article No. 48-i of UCP)
- At this time, if transferred by reducing unit price or amount gain could have been
developed therefore, a transferor collects bill of change issued by a grantee to
acquire the same gain and issue a bill in the order of an opening bank in the amount of master L/C face value which is called bill substitution. |
|
| <2> The right of negotiation from transferring location |
|
- In order to secure the right to exercise the invoice substitution and bill
substitution, a transferor nominates the Nego bank of a grantee as a specific bank that he/she wants or restrict the Nego period of transferring L/C or reserve the right to reserve of notification in advance to a grantee.
(The Sub-Article No. 48-i of UCP)
- Since a grantee may decide the Nego bank for transferring L/C if master L/C is
Negotiation L/C, the necessity of a transferor to exercise the right occurs. |
|
| <3> The right to request non-publicizing the transferring details |
|
- For L/C transferring in the purpose to acquire transfer gain : A transferor may
request to a transferring bank to refrain from disclosing the details of L/C
transferring to an opening bank and to applicant. |
|
(6) Transferring procedures |
<1> Conclude transferring contract
<2> Request transfer
<3> Examine transfer condition
<4> Notify transfer
<5> Perform export
- The first beneficiary presents Application for Advice of Total or Partial Transfer( Indicate
the 2nd beneficiary's address) to the bank that accepts transfer.
- Bank accepting transfer attach Transfer Advice as per the original beneficiary instructs
on a inquiry form and send the original set to a grantee which is the 2nd
beneficiary, at this time indicate [This credit had been totally(or partially)
transferred to ABC Co. for U$12,000 by XYZ Bank] on the back of master L/C.
Specially for the partial transfers, if goods are indicated per its kind or the quantities
re-clearly stated the said items name and the quantities should be also indicated in
the back of the master L/C.
- A transferring bank sends duplicate Transfer Advice to a transferor, opening bank,
advising bank and send transfer L/C prepared by the transferring bank to a grantee. |
|
(7) Required documents for transfer request |
1 Original set of export L/C
2 Application for transfer
3 A seal impression handwriting name plate application of a transferor and a grantee
(Offer of a grantee for oversea transfer) |
|
(8) Things to confirm when transfer |
1 Condition whether the said L/C is transferable L/C
2 Condition whether the sid bank is authorized to pay, take over and Nego as per L/C
3 Condition whether the transfer request is based on the joint signature of the original
beneficiary and the 2nd beneficiary.
4 Condition whether the transfer is good for one time.
5 For partial transfer, condition whether the master export L/C permits partial shipping
and that the transferring amount is not exceeding the amount of the master export
L/C.
6 Condition whether the presenting master export L/C has loan and if there is any
indication that restricts transfer in the light of the administration of the country. |
|
Trade Helper 
L/C(Letter of Credit)
{1} Letter of credit
[9] Transferring L/C 
2006 - 2011 tradegoods.com All right reserved