Transfer LC- LC condition modify/delete

[dinesh2476]

•Article 38 - Transferable Credits
g. The transferred credit must accurately reflect the terms and conditions of the credit, including confirmation, if any, with the exception of:

Need expert opinion to understand whether transferring bank has the right to modify and delete LC condition to make it workable.

a). LC states...
1. Packing list presented in 1 original and 2 copies by the first beneficiary.
2. Bill of lading states.. notify party as applicant... which 1st beneficiary states to modify.

However, 1st Beneficiary wants to delete the ''first' in the packing list and delete the applicant name in the bill of lading under notify party while transferring a credit to 2nd Beneficiary

b.)
and field 47A states all documents must evidence LC number and documents should not be issued prior to LC issuing date
can we modify these conditions by including LC number and issue date of master LC while transferring to second beneficiary as MT720 would state different LC number and issue date which would lead to discrepancy in the presentation of 2nd beneficiary when combine with master LC.

c.) Additional conditions also states some conditions which we feel unnecessary to share it with 2nd Beneficiary. can we delete those condition post an agreement with 1st beneficiary.

Thanks
Dinesh Kumar

[cristiand969]

The transferred credit must accurately reflect the terms and conditions of the credit, including confirmation, if any, with the exception of:
- the amount of the credit,
- any unit price stated therein,
- the expiry date,
- the period for presentation, or
- the latest shipment date or given period for shipment,
any or all of which may be reduced or curtailed.
The percentage for which insurance cover must be effected may be increased to provide the amount of cover stipulated in the credit or these articles.
The name of the first beneficiary may be substituted for that of the applicant in the credit.
If the name of the applicant is specifically required by the credit to appear in any document other than the invoice, such requirement must be reflected in the transferred credit.

[dinesh2476]

dear Criste,

Any specific reason for having ''must accurately reflect the terms and conditions of the credit'' in the transfer LC(UCP article).

I feel addition and deletion in the LC would create problem only when situation comes to forward the 2nd Beneficiary documents directly to issuing bank, since the damage is already done in forwarding the 2nd beneficiary documents to issuing bank , addition and deletion made in the transferred credit make difference here.

we have been doing business with 1st beneficiary for a long time, and they are insisting to 'delete'' the wording ''First'' in the beneficiary certificate and in few documents requesting to delete the LC condition which states expectation of 1st beneficiary to present.

Since they agreed to replace the documents, they are saying to incorporate into transferred credit for the details to incorporate the same in their certification while replacing documents under master LC.

don't see an issue as long as all documents presented according to master LC.

need expert opinion on must accurately reflect the terms and conditions of the credit'' in the transfer LC(UCP article).

Thanks & Regards
Dinesh Kumar

[cristiand969]

The transferring bank is taking a great responsibility in terms of forwarding the accuracy of the information to second beneficiary. As such, if the first beneficiary won't show up to replace the documents (either because of later disagreements with applicant or simply because of entering into bankruptcy or other forms that prevents him to perform under the credit ) the transferring bank will be sued by 2nd beneficiary for such deviations from the UCP600 procedures and will certainly loose not only money, but generally their reputation.... .
Therefore a special form of guarantee from the 1st beneficiary has to be provided to cover the risk of the transferring bank.
However, the L/C is badly worded from the beginning by requesting a first beneficiary certificate on a transferable credit without modifying art 38 g. accordingly. I would personally remove such requirement and agree with applicant that such document to be sent outside of the credit
Good luck !