Transferable Credit

Transferable Credit :

A letter of credit is not a negotiable instrument and is not transferable by delivery or endorsement except under the express authority of the opener. When the business is transacted through a middleman, credits are sometimes marked transferable. This enables the middleman, in whose favour the original credit is issued to ask for a transfer of the credit to another party who may be manufacturer or the actual supplier. Transferable, assignable and transmissible are terms which normally convey the same meaning.

A transferable credit should be clearly designated as transferable by the opening bank which will of course be acting on the instructions of the opener (buyer). A transferable credit permitting part shipments may be divisible in which case the amount of the credit can be split in favour of more than one beneficiary against separate shipments.

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