Transferable Letter of Credit

A Letter of Credit designated as such in respect of which the Beneficiary may request (although not require) the appropriate bank to make the Letter of Credit available to one or more other parties. Typically used by the Beneficiary of the Letter of Credit to pay its supplier.

A transferable Letter of Credit avoids the risk inherent in a Back to Back Letter of Credit that documents which are accepted and paid against under a Letter of Credit issued on the Security of another Letter of Credit are not accepted and paid against under that other Letter of Credit.

A transferable Letter of Credit is not a Transferable instrument.

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