Original LC Was Deferred But Transferred As Sight Payment

[Navi]

Today my trouble day, friends...
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We received an MT720 from transferring bank (without adding confirmation) and advised second beneficiary without our confirmation. We learned from second beneficiary that the original LC was deferred payment LC but was transferred to us as sight payment LC.

Second beneficiary shipped goods and presented docs to us which were discrepant and were sent on approval basis. Although docs were accepted by both first beneficiary and applicant, and issuing bank advised acceptance to transferring bank through swift, the transferring bank refuses to pay for docs. They say that they will remit after they receive funds from issuing bank. In other words they await maturity dates for payment of the original LC and want to pay us afterwards. However, we know that docs were released to applicant and applicant cleared goods.

Does the transferring bank have right to do this, i.e. despite acceptance of docs.?

In my opinion this is a sight payment LC, they have the right to reject docs and return them to us, but no right to delay payment after release of docs...

What's your opinion friends?

[nesarul]

Dear,
My thinking:
Despite the transferring bank is not obligated to honour the second beneficiary's claim. The transferring bank has no right to change the credit availability and will be deemed as a gross violation of sub article 38(g) and thereby liable.
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Regards
nesar.

[iLC]

i agree with nesarul. transferring bank has no right to do so. besides, the 2nd beneficiary in no way suppose to know that the original LC was a deferred one. the transferring bank is liable.